Taurus identified an opportunity to invest in the acquisition of three partially “rent-regulated” apartment buildings located in the quickly gentrifying northern Manhattan residential market. Collectively these Assets included 82 units and were +95.0% occupied by a combination of rent-regulated and free-market tenants. The acquisition of 144th Street occurred in July of 2013 with the acquisition of the other two properties expected to take place in the Fall of 2013.
Taurus was investing in a strategic partnership with Synapse Residential Group; an experienced New York City multi-family investor. Taurus acquired the properties at a significant discount to replacement costs and capitalized on historically low interest rates to help produce stable cash flow distributions from the Assets. The initial net operating income was expected to increase throughout the holding period, resulting in a higher property value, through the following measures:
- Contractual rent growth of the rent-regulated units
- Converting a limited number of rent-regulated units to market-rate
- Making select in-unit and common area upgrade investments
- Increasing rent on market-rate units that are rented at below-market rates
- Improving operating inefficiencies
Future outlook: Taurus and Synapse would like to target additional investments of individual or small portfolio acquisitions of 20—100 unit residential properties located throughout Manhattan and its surrounding boroughs. Over the course of the next three years the strategic partners believe they could acquire more than 500 units through this same strategy. Taurus believes that the aggregation could allow for additional value enhancement through a “portfolio premium” that a future take-out buyer might ascribe to the collective assets. Taurus intends to create additional new offerings for each of these new investment opportunities.