In a deal somewhat outside of its traditional niche, Savanna has obtained a majority stake in a luxury apartment complex in Long Island, New York as part of the asset’s recapitalisation plan.
The New York-based private equity real estate firm has formed a partnership with Pantzer Properties, whereby Savanna will obtain a majority stake in Atlantic Point, a 795-unit multifamily asset near Bellport, Long Island that is valued at $196 million. In exchange for the stake, Savanna and Pantzer have refinanced the existing debt on the asset with a new seven-year, $169.6 million loan comprised of a $138.6 million first mortgage issued by Berkeley Point Capital and a $31 million mezzanine loan originated by Berkshire Property Advisors, effectively de-levering the property by approximately $30 million.
Although representatives from Savanna declined to comment on fundraising activities, sources familiar with the situation told PERE that the firm financed the deal on behalf of Savanna Real Estate Fund I, which raised $313 million in equity in 2006. Last year, Savanna Real Estate Fund II closed on $550 million in equity commitments.
Savanna is acquiring its stake from Pantzer, which initially purchased the property in phases between 2003 and 2004 from a joint venture between Trammell Crow and JPMorgan. Pantzer will retain a minority stake in the property and continue to oversee the day-to-day management of Atlantic Point.
“We are excited to partner with Pantzer to own and operate this property,” said Andrew Fichte, senior associate at Savanna. “This is a Class A apartment and town-home community that is well located in central Long Island, where the immediate town of Brookhaven is experiencing a growing economy.”
Fichte added: “It took more than 10 years for this property to be entitled, planned and built, so it is not an asset that can be easily replaced.”
Sources noted that Savanna and Pantzer are planning to implement a multi-million dollar capital improvement programme at the property. Planned improvements include a major renovation of the clubhouse and a variety of unit upgrades.
Savanna is known for purchasing under-leased Class B offices in Manhattan and renovating them to Class A standards. Examples include 15 East 26th Street, 31 Penn Plaza and 100 Wall Street. And although the firm is not a stranger to the multifamily space—most notably, it recently purchased 141 Fifth Avenue and converted the property to high-end residences—Savanna’s specialty is the office sector. This transaction marks Savanna’s first purchase on Long Island.