Kenneth Pasternak has formed KABR Real Estate Investment Partners to target discounted properties in the New York region and Florida insisting the US was seeing a “once in a generation” opportunity.
The founder of Knight Trading Group, the one-time largest market maker in NASDAQ-traded securities, plans a series of three funds to take advantage of distressed assets and sellers, telling PERE: “This is an optimal time to be owning bricks and mortar assets.”
Pasternak set up Paramus, New Jersey-based KABR with Adam Altman and Laurence Rappaport, with the firm this week closing on its first deal – the purchase of the former AIG office property, 85 Challenger Road, in Ridgefield Park, New Jersey. The deal is believed to have closed for between $6 million and $12 million.
KABR I has roughly $35 million in commitments, funded partly by Pasternak, Altman and Rappaport, and by high-net-worth individuals. The fund is expected to acquire and dispose of properties over an eight-year period, although the vehicle does not have a fixed life span. In total, KABR expects to raise up to $150 million for investment over the course of three funds, with half the capital coming from the firm’s founders.
Pasternak said he has acquired around $100 million of property over the last three years, while Pasternak’s family office has been an active investor in direct real estate since its inception in 2002. The family office, Pasternak said, expects to increase its allocation to real estate in the coming years.
KABR will target income-producing properties within a 150-mile radius of New York, concentrating on office and multifamily assets. However, Pasternak added the firm would also look at partially-completed, for-sale condo projects, particularly in Florida.
“This is going to be a pretty lengthy bottom trough recession, and real estate offers some exciting pricing opportunities and the right kind of returns for the right kind of risks,” he said.
The Challenger Road office attracted 17 bids of between $6 million and $12 million, according to brokers Cushman & Wakefield. “KABR has bid on a lot of properties, but this is the first time a seller has been realistic over pricing,” Pasternak said.