News Summary
Kahen Properties experiences a staggering loss after selling four buildings in Washington Heights for $8.8 million, significantly lower than their 2018 purchase price of $22.1 million. This 60% drop highlights the challenges faced by landlords amidst evolving rent laws and tenant retention issues in New York City.
Washington Heights Real Estate Shocker: Kahen Properties Sees Huge Loss in Sale
In a surprising twist in the New York City real estate market, Kahen Properties has sold off four multifamily and mixed-use prewar buildings located in the heart of Washington Heights for a mere $8.8 million. That’s quite a bit lower than the $22.1 million the company shelled out back in 2018, resulting in a staggering loss of nearly 60%. The sale was recently recorded in the city register, catching the attention of both real estate industry insiders and budding landlords alike.
Understanding the Loss
These properties encompass approximately 125 rental units, and it seems that they’ve been struggling under the weight of New York City’s evolving rent laws. In fact, the deal officially went into contract on March 26 and managed to close just days later on April 3, but the numbers tell a different story for Kahen Properties, headed by Alex Kahen.
The lost revenue is not just a one-off situation for Kahen Properties; it’s reflective of broader trends impacting owners of rent-stabilized properties across the city. With pro-tenant laws enacted in 2019 and beyond, raising rents on vacant, rent-regulated units has become increasingly difficult. This shift has left many landlords in a tricky spot.
The Inflexible Rental Market
What makes these properties uniquely challenging is their long-standing tenant retention. With low turnover rates and rents that linger well below market averages, profitability is like chasing shadows. Just to illustrate, about half a dozen apartments at 476 W. 165th St. have come open in the last four years, showing how rarely tenants opt to leave.
For context, the most recent two-bedroom unit at 476 W. 165th St. was listed at around $2,000 monthly, strikingly lower than Manhattan’s median rent of approximately $4,500 as of February. The disconnect between these two figures highlights the challenges landlords face in an evolving market.
What’s on the Block?
The properties sold in this deal were:
- 476 W. 165th St.: A 54-unit site originally purchased for $9.5 million
- 503 W. 164th St.: A 24-unit building acquired for $4.6 million
- 524 W. 162nd St.: A 20-unit property bought for $3.4 million
- 2153 Amsterdam Ave.: A 25-unit site with both a ground-floor restaurant and a cake shop, previously traded for around $4.6 million
Elysee Investment Corp. Steps In
On the other side of the transaction, Elysee Investment Corp., which invests primarily in shopping centers, hotels, and apartment buildings across New York and South Florida, snagged the properties without using a mortgage. Led by CEO Haim Yehezkel, Elysee certainly appears to be making strategic moves in a tumultuous market.
Interestingly, Kahen Properties does have other ventures to fall back on, such as the Mason, a 70-unit upscale rental building located at 145 Madison Ave. in NoMad, which was acquired for $12.3 million back in 2013.
Broader Implications for the Market
As we navigate through this shifting landscape of New York City’s real estate scene, it’s essential to recognize the pressures facing landlords of rent-stabilized buildings. With high interest rates making refinancing a challenge, many owners find themselves at a crossroads, unsure of how to adapt to changing market conditions and updated regulations.
The sale of these Washington Heights properties is not just a loss for one company but a cautionary tale, highlighting the ripple effects of shifting housing laws and financial pressures that are reshaping New York’s rental market. And it leaves everyone asking: what’s next for both tenants and landlords in the City That Never Sleeps?
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Additional Resources
- Crain’s New York: Kahen Properties Sells 4-Building Washington Heights Portfolio
- The Real Deal: Rent Control Drama in Washington Heights
- New York Times: Washington Heights, Last Bastion of Affordability in Manhattan
- Google Search: Washington Heights real estate
- Wikipedia: Real estate in New York City
