Commercial Real Estate Direct Staff Report
United Realty Trust, a non-traded REIT led by investor Jacob Frydman and Eli Verschleiser, has agreed to pay $22.25 million, or $190,170/unit, for Tilden House, a 117-unit apartment property in Brooklyn, N.Y.
Frydman and Verschleiser, seasoned New York real estate investors, had launched United Realty in late 2011 with an eye toward raising $1.3 billion through the sale of shares that would be used to invest in a broad range of real estate in the eastern United States. The REIT received regulatory approvals to start selling shares last August and as of the end of last year had raised $2.1 million, enough for it to start investing.
Tilden House is a nine-story building that was completed in 2007 at 2520 Tilden Ave., just south of Brooklyn's Flatbush area. It becomes United Realty's first acquisition. It was purchased from an investor group that is expected to invest in a venture that United Realty will form to own the property. The property's sale was brokered by Besen & Associates.
The REIT is also expected to seek $14.5 million of mortgage financing.
Tilden House is unusual for an apartment property in that it is net leased to an operator that pays $2.3 million of annual base rent, subject to increases tied to the consumer price index every three years. That operator, the Highland Park Community Development Corp., operates the building as a Tier II shelter, meaning it's a transitional housing facility for homeless families. Its net lease runs through the end of 2031, but can be canceled in 2021 and 2026 by Highland.
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