The Sale of 422 Bleeker Street, Bushwick, Brooklyn

Overview

We are pleased to announce the sale of 422 Bleecker Street in Bushwick, Brooklyn. The asset was 83% occupied at contract signing and traded at 98% of the asking price. Throughout our marketing process, we generated 17 offers in a controlled timeframe to create a competitive market and ultimately execute above the seller’s expectations.

 

The sale price reflects a cap rate of 7.4%, beating the market average for stabilized product by 100 bsp. For context, 441 Bleecker Street, an eight family across the street sold six months prior for $765,000 (8.87% cap), despite a higher NOI of $95K compared to 422 Bleecker’s $65K.

 

The key differences that drive our ability to outperform market pricing is our implementation of a methodical and strategic marketing process, product and geography specialization (in this case, my hyper-focus on North Brooklyn Multifamily), and Matthews’ collaborative database and network.

 

Seller Profile

Private owner looking to 1031 into a more passive investment as he enters retirement while still building generational wealth for his family.

 

Buyer Profile

Private capital investor attracted to the low basis that’s offered in today’s market and long-term upside with owning in NYC.

 

Challenges Faced

Market Comparables

The local market saw 13 fully rent stabilized transactions last year, with an average price point of $827,324. A RS 8-family across the street, 441 Bleecker Street, sold just six months prior for $765,000, despite having a 46% higher NOI. This established a direct comparable in the 9% cap range, 150+ basis points higher than our asking price.

 

Buyer Reluctance Around Rent Stabilization

Following the passing of the Housing Stability and Tenant Protection Act of 2019, many buyers have avoided rent stabilized properties, citing limited upside amid rising operating expenses and expensive debt.

 

Solution & Strategy

DHCR Due Diligence

Whenever selling a rent-stabilized building it is critical to build the right team in order to get buyers comfortable with the offering. From the start, we engaged a third-party consultant specializing in DHCR matters. The specialist’s research and findings were crucial in establishing a clear profile of the building’s history. This encouraged buyers to perform underwriting, shortened the timeline for receiving formal, informed offers, and reduced the likelihood of a retrade further down the line.

 

Strategic Marketing & Network Reach

By leveraging Matthews’ extensive investor network, we created a competitive bidding environment, yielding 17 offers. This provided us with both leverage and momentum to secure terms at the top of the market.

 

Managing Momentum

Speed was key. We engaged qualified, aggressive buyers early. A qualified high-bidder was identified and several backup buyers were ready to step in, ensuring a contract was signed within two months of launch and a closing was achieved on schedule.

 

Outcome

The culmination of these efforts resulted in the successful sale of 422 Bleecker Street for $880,000 to an experienced private buyer who owns multiple properties in the neighborhood. This transaction exceeded our seller’s expectations and allowed them to shift to a more passive investment.