Blackstone To Acquire Kips Bay Court For $620M

Phipps Houses' could get about $700M for its Kips Bay Court.
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Jonathan Gray’s Blackstone Group is about to close the city’s largest multifamily deal so far this year with its $620M acquisition of the 894-unit Kips Bay Court market-rate rental complex.

The deal, which has units selling for $700k each, is expected to be under contract within the next week, The Real Deal reports. It’s almost double the value of the current multifamily deal leader, Fairstead Capital’s $315M purchase of Savoy Park in July.

This is a return to form for Blackstone, which made the city’s two largest multifamily purchases last year with the $5.3B acquisition of Stuyvesant Town-Peter Cooper Village and the $690M purchase of the Caiola portfolio, but has been struggling throughout 2016.

Affordable housing developer Phipps Houses developed the eight-building complex in 1975 under the state’s Mitchell-Lama housing program, and has owned the property since. About a decade ago, Phipps left the program—which caps profits and rents—and has made Kips Bay Court a market-rate offering.

The number of Section 8 apartments has halved since 2004, and the 40% of units occupied by federally subsidized tenants bring in market-rate rents. The net operating income of the complex is expected to be $23.9M in 2017, jumping to $41.6M by 2027 when the number of Section 8 tenants drops to 69. [TRD]

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