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Thursday, October 23, 2008

Deutsche Offers Debt on Manhattan Portfolio

Oct 17, 2008 - CRE News

Deutsche Bank is offering for sale the debt it had provided last year for a portfolio of apartment properties with 384 units on Manhattan's Upper West Side.The lender has tapped New York broker Massey Knakal Realty Services, which specializes in the sale of New York-area apartment properties, to solicit investor interest. Offering material the company has made available to investors noted, "Lender requests proposals." It did not include an asking price.

City records show that the properties are encumbered by a combined $75.5 million of debt, but sources said they might have another $15 million to $20 million of mezzanine debt as well. In any event, it's not likely that the debt is worth anywhere near $75.5 million today, given the state of the credit markets and the collateral's relatively low net operating income.

The portfolio is comprised of 22 buildings on 109th Street between Columbus Avenue and Broadway. All but 29 of their 384 units are subject to either New York's rent stabilization or more restrictive rent-control laws. A total of 282 units are subject to rent stabilization and generate rents that average $1,063/month.

Another 65 units are subject to rent control and pay an average of only $240/month in rent. Those units average 650 square feet. The 29 market-rate units pay an average of $2,156/month in rent.

The portfolio is owned by a venture led by Pinnacle Group, which is believed to have picked it up as part of a larger acquisition in 2005 for which it paid $500 million.

It had teamed with Praedium Group on that acquisition, but it's not known whether Praedium maintains an interest in the 22 buildings that back the Deutsche debt being offered.


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