Equity Residential, the largest U.S. publicly traded apartment owner, is close to a deal to buy the Beatrice luxury tower in Manhattan's Chelsea neighborhood for $280 million, expanding in New York as rents jump.
The sale of the 302-unit property on 29th Street and Sixth Avenue, probably will be completed this week, said a person with knowledge of the transaction, who asked not to be named because the details are private. The seller is JD Carlisle Development Corp., the person said. The apartments are atop the Eventi hotel, which isn't included in the deal.
"Beatrice reflects your priorities. Your dreams," reads the website for the property, where apartments start on the 26th floor of the 53-story tower. "Breathtaking views through wall-to-wall windows provide a dramatic backdrop for every spacious residence, with ceiling heights of 9 feet to over 12 feet."
Marty McKenna, a spokesman for Chicago-based Equity Residential (EQR), said the company is in contract negotiations for the building and declined to comment further. Evan Stein, president of JD Carlisle, and Jules Demchick, the company's chairman, didn't return voice mail messages.
Record Prices
Investor demand for apartment buildings in Manhattan has sent prices to record highs, reducing yields on the properties to the lowest in more than six years. The capitalization rate, a measure of investment return that declines as prices rise, averaged 4.4 percent for Manhattan multifamily buildings in first three months of the year, the lowest since the third quarter of 2005, according to New York-based data firm Real Capital Analytics Inc.
At $280 million, the purchase of the Beatrice would be second-largest Manhattan apartment deal this year, according to Ben Thypin, director of market analysis at Real Capital. Only the $630 million acquisition of the five-building Columbus Square complex on the Upper West Side by UDR Inc. (UDR) and MetLife Inc. (MET) was bigger.
Buyers are attracted to buildings such as the Beatrice, which was completed in 2010, because they have lower operating expenses and tend to attract wealthier tenants, he said.
"Institutional investors are comfortable paying a premium right now because of the confidence they have that rents will increase" at newly constructed properties, Thypin said.
Limited Supply
Manhattan apartment rents are expected to climb 6.7 percent this year as limited new supply comes to the market amid a surging demand for leasing, according to Dallas-based Axiometrics Inc. The research firm projects that 2,486 new apartments will become available in the borough in 2012, a 0.3 percent increase from last year.
Monthly rents for available apartments at the Beatrice range from $2,983 for a studio to $16,975 for a three-bedroom unit, according to StreetEasy.com, a property-listings website that reflects both full-term leases and sublets at the tower. Penthouse units have been listed for as much as $22,000 a month.
Equity Residential currently has 15 properties in Manhattan, according its website. The company was founded by billionaire Sam Zell, who remains chairman.
