Private equity giant Carlyle is buying up Brooklyn apartment buildings

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  • The Carlyle Group has built a portfolio of 130 apartment buildings in Brooklyn, The Real Deal said.
  • High-volume, low-cost housing offers are akin to the single-family rental strategy currently in vogue.
  • The Real Deal reported that the company’s strategy is to find smaller buildings with lower tax risks.

One of the world’s largest private equity firms is quietly building a $500 million+ portfolio of over 130 buildings in some of Brooklyn’s hottest neighborhoods.

The Carlyle Group has bought small apartment buildings in Bushwick, Bedford-Stuyvesant, Park Slope and Cobble Hill, joining 45 deals with Greenbrook Partners, a private equity firm whose treatment of tenants after the Real estate acquisition has drawn the ire of Senate Majority Leader Chuck Schumer, The Real Deal reported last week.

The Carlyle Group, which raised an $8 billion property fund last year, is avoiding the usual tactics of investors its size by deploying capital in numerous small deals instead of buying larger buildings worth hundreds millions of dollars.

The strategy is similar to institutional single-family rental purchases that began at the end of the Great Recession, with companies striking deals to build massive portfolios of homes. But this time around, big money is consolidating existing rental units instead of turning owner-occupied homes into rentals.

The Real Deal uncovered instances in which the company purchased small buildings for as little as $2 million, which pales in comparison to other recent deals by the company or its competitors, such than the company’s 2021. $85 million purchase in Queens. The company set a record for the highest price for a multifamily property in this New York borough in 2018, with the $284 million purchase of a luxury rental property in the Long Island City neighborhood.

After the multitude of purchases, Carlyle obtained a $500 million mortgage from Invesco for the properties.

According to reports from The Real Deal, Carlyle is targeting specific buildings that limit property tax increases to no more than 8% per year and are generally not rent-regulated. This is especially attractive now because a favorite New York City tax break, the 421a property tax exemption, expired earlier this summer.

This portfolio is not only strategic from a tax point of view, but from a geographical point of view. Brooklyn is an extremely attractive market for investors as it continues to grow and attract new residents. Rents for one-bedroom apartments have risen more than 25% in Brooklyn in the past 12 months to June.

Forty-five of these buildings were purchased in December 2021 with the help of Greenbrook Partners. Greenbrook shot heavy criticism and political attention for refusing to renew leases for longtime tenants of a Park Slope apartment complex he bought last year, and was described by Senate Majority Leader Schumer as a ‘despicable’ company that ‘preys on people’.

GreenbrookThe website says it focuses on “poorly maintained, undermanaged and undercapitalized assets located in growth-oriented and transitioning submarkets” and plans to “maximize value” through its investments. .

A Recent ProPublica The story detailed the challenges faced by some tenants of private equity landlords, whom reporters described as the corporate version of a house turner who renovates and resells properties for a profit.

More recently, some business owners have come under fire from a House Subcommittee for continued widespread evictions during the CDC’s nationwide eviction moratorium in response to the COVID-19 pandemic.

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