New York’s Manhattan will see more affordable housing locked in long term in a deal financed partly by one of the world’s richest universities.
Harvard Management Company, the investment arm of Harvard University’s $36.4 billion endowment, and A&E Real Estate Holdings, a New York City real estate investment firm, have purchased a seven-building multifamily property in Harlem, one of Manhattan’s poorest neighborhoods. The groups bought the 1,129-unit Riverton Houses for $201 million. A&E’s takeover of the asset was announced last month but Harvard’s involvement in the deal was not reported by media outlets until Thursday.
In a deal similar to The Blackstone Group and Ivanhoé Cambridge’s purchase of Stuyvesant Town-Peter Cooper Village in October, Harvard and A&E agreed to affordable housing stipulations in exchange for tax breaks. By agreeing to make $40 million of improvements and keep 975 units affordable for 30 years through a tiered system of rent, the city granted the buyers a tax break of just over $100 million.
Former New York City Mayor David Dinkins has praised the deal to keep his childhood home accessible to lower-income residents.
“Riverton is part of Harlem’s soul and this agreement maintains Riverton as a bastion of affordable housing for working and middle-class families,” he said last month at a press conference. “After a decade of uncertainty, we can finally say Riverton has a bright future and that its tenants will be protected.”
Like Stuyvesant Town, Riverton Homes had a troubled history. New York real estate developer Stellar Management bought the property in 2005 for $131 million but, after failing to bring in higher-paying tenants, the firm defaulted on its $225 million mortgage. Loan servicer CWCapital Asset Management has controlled the apartment complex since taking over from Stellar in 2010. CWCapital and A&E Real Estate could not be reached for comment.
Metropolitan Life Insurance Company originally built the property in 1947 for returning World War II veterans as a sister site to Stuyvesant Town, which originally did not allow minority residents. That 80-acre property came under the same kind of financial distress as Riverton following the recession, with a similar resolution last year. Five years ago, New York-based private real estate owner Tishman Speyer defaulted on the loan that financed the developer’s $5.4 billion acquisition of Stuyvesant Town in 2006, so the property was subsequently transferred to CWCapital. In October, Blackstone, the world’s biggest private landlord, bought the island’s largest apartment complex with Ivanhoé Cambridge, the real estate investment subsidiary of Canadian pension plan Caisse de dépôt el placement du Québec, for $5.3 billion.