January 26, 2004

The nation's largest apartment owner is prowling Long Island and New York City for acquisitions.

Apartment Investment and Management Co., or Aimco, a $14-billion, Denver-based real estate investment trust (REIT) with more than 380,000 apartments in 47 states plus Washington, D.C., and Puerto Rico, has in a few short months acquired several buildings on Manhattan's Upper West Side and Upper East Side, all rent-regulated. Its latest deal, closed last week, gave it 1691-1693 Second Ave., 1695 Second Ave., 238 E. 88th St., 510 E. 88th St. and 452 E. 78th St.

Aimco also has signed letters of intent for other buildings in Manhattan and in the outer boroughs. And it has just begun to scout Long Island.

"Anywhere on the Island is of interest," said Aimco's point man in its search, Dan Margulies, senior vice president of the Manhattan-based commercial property brokerage Georgia Malone & Co. "We're trying to spread the word that we're interested."

The New York-Long Island multifamily market, long dominated by family owners and real estate entrepreneurs, is ripe for sales by large owners, because prices are high and will remain so as long as interest rates stay low, said Margulies. He added that legislative action extending rent regulation in the city and Nassau County has brought stability to the market.

"Most of the the units have caught up [in terms of rents] to the market or are close to it," said Margulies, who before joining Georgia Malone ran an association of landlords of rent-controlled apartments. Thus, he said, there is little potential for big investment returns. But Aimco and other institutional investors will settle for steady returns and moderate upside potential. "They want to pay dividends and keep their shareholders happy, but not take the huge risks that private entrepreneurs take."

Moreover, the region's low vacancy rates of 2 percent to 5 percent, compared with 8 percent to 10 percent elsewhere in the country, are attractive to REITs.

Aimco, which typically seeks buildings or communities of 200 units or more, has set its sights lower in this region, where buildings often are smaller. What's key is having multiple properties clustered in one neighborhood, said Margulies. "Nothing's too small."

The REIT is not interested in luxury properties. "Just solid, everyday apartment buildings," said Margulies. "They like neighborhoods with people who work. Solid, moderate, middle income, B-type housing. Plain vanilla is good." Top communities on Aimco's list: Great Neck, Hempstead, Long Beach and Glen Cove.

Certainly, Aimco has competition on the Island for properties, including Rochester-based Home Properties Inc., which owns 41,580 apartments, including 3,409 Long Island units, and Commack-based Fairfield Properties, which owns about 5,000 units in Suffolk County.

Aimco offers potential sellers cash, tax-deferred securities or a combination of these, while providing sellers who opt for securities a broad geographic diversity, Margulies said. "It's a very significant advantage."

Transactions

In Manhattan:

The investment firm Apollo Management subleased 31,500 square feet formerly occupied by Tyco Corp. at 9 W. 57th St. for 11 years. The investment firm will relocate from 1301 Ave. of the Americas, where it occupies about 29,000 square feet. Stuart Romanoff, Amy Fox and David Rowley, all of Cushman & Wakefield, represented Apollo in negotiations with the landlord, Solow Building Co. and Tyco.

Organization Resources Counselors Inc., a human resources management consulting firm, leased 28,251 square feet at 500 Fifth Ave. The company will relocate from 1211 Ave. of the Americas, where it occupies 25,575 square feet. The firm was represented in lease negotiations at 500 Fifth Ave. by Jonathan Serko, Barry Zeller and David Malawer of Cushman & Wakefield. The landlord, 500 Fifth Avenue Inc., was represented by Newmark & Co.

Jean Louis David, the hair salon chain owned by Regis Corp., is returning to downtown with a 10-year lease for 2,250 square feet of retail space at 30 Vesey St., opposite Ground Zero. The tenant was represented by Ariel Schuster and Richard Gelber, both of Robert K. Futterman & Associates. Building owner Greystone Properties was represented by Ray Abramcyk of Abramcyk Real Estate Co.

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