CHALLENGE

102 Baltic Street is a perfect example of a properly type whose buyer pool had recently shrunk. Of its eight residential units, six are rent-regulated apartments and one has a Section 8 tenancy. While the property haci been well managed from a structural and systems point of view. the average rents for the properly were under S1.500 per month—significantly below prevailing market rents in the area. The sale of rent stabilized assets poses unique challenges in today's regulatory environment. Buyers have become reluctant to inherit legacy tenants vino benefit from under market leases. Their low cost of living provides a strong incentive to stay in units long term. As a result, buyers of these assets have begun underwriting Wth much less potential upside in an asset's future cash flows. Unfortunately for owners, prices and sales velocity for these properties have dipped dramatically.

The seller of the subject properly had arranged a reverse 1031 exchange that required him to sell the properly within a six month Wndow. He had attempted to sell to an off-market buyer who tied up the properly in protracted contract negotiations and ultimately did not perform. After this broken contract, the seller recognized his need to act quickly to find a replacement buyer. By the time he approached Nowak+Pariners to market the properly on his behalf, he had less than three months to arrange a closing.

ACTION

The owner of 102 Baltic Street had regularly sought Matt Rosenzweig's assistance assessing and valuing his properlies over the previous years, and hired Matt and his colleagues at Nowak+Partners to quickly mobilize an extensive marketing campaign.

RESULT

After an extensive marketing campaign. Nowak + Partners introduced a number of competitive bids and negotiated a non-contingent contract of sale Wth an all-cash buyer at the equivalent of .30 per existing square foot - a local price record for the sale of a multi-story commercial building. In the end, the tenant did exercise their right of refusal. but was forced to match t. hig.st offer the market could bear and purchase the properly do record setting price - a price which included a premium for the building's nevily acquired ar rights.

• Local Area Price Record for the Sale of a Multi-Story Commercial Building.

• Sold without Buyer Contingencies at a Selling Price of 51,500,000 above other Broker's Initial Estimates of Value Multiple Competitive Bids in Spite of an Existing Tenant Right of First Refusal.

• Selling Price Reflective of Both the Existing Building's Value and the Added Value of Newly Acquired Air Rights from East New York's Recent Up-Zoning.