Private Equity Heavyweight Carlyle Builds Empire Of Small Brooklyn Rentals
The Carlyle Group has become the latest institutional investor to move into the traditionally mom-and-pop landlord world, reportedly spending up to a half-billion dollars buying properties in popular residential areas in Brooklyn.
The private equity player, one of the largest in the world, has built up a $500M portfolio in the borough, The Real Deal reports. In the last year, it has purchased 130 buildings — typically buying them one at a time at $2M and $3M price points. The buildings are in places like Bushwick, Bedford-Stuyvesant, Park Slope and Cobble Hill.
Just this month, for example, it spent $2.2M on a three-unit building at 460 Harman St. in Bushwick, Pincus Co. reported.
“Generally these owners are small to midsized operators that bite off what they can chew,” Ariel Property Advisors founding partner Michael Tortorici told TRD. “It’s not often you see people looking to amass massive portfolios.”
He said in the past, these kinds of investments have been an entry point for individuals to get into the market, not private equity stomping grounds.
Carlye joined with Greenbrook Partners to buy 45 buildings in December, per TRD, and paid $34M for a 40-unit building in Clinton Hill and $85M for a 175-unit rental building on Jackson Avenue in Queens.
Wall Street’s rapid encroachment into this area of the real estate market has raised the concern — and ire — of many residents and politicians. Nationally, investors bought more than 18% of all homes sold in the last three months of 2021.
In the parts of the country where major investors are targeting the single-family rental market, many community members say it is worsening the affordable housing crisis. Last month, the House Committee on Financial Services held a hearing on investors in the housing market, gathering data on institutional landlords.
“This predatory purchasing contributes to our nation’s shortage of affordable housing and exacerbates the racial wealth gap,” Rep. Al Green, a Democrat from Texas, said at the hearing, as Bisnow this month reported in an examination of the fallout of Wall Street’s move into the rental market.