By Adam Pincus
A Canadian real estate investment firm that sought to convert a Carnegie Hill rental building into condominiums sold it this month for $11 million less than its 2016 purchase price.
Montreal-based Crest Realties sold the 38-unit 118 East 93rd Street on February 3, 2020, to Anthony Gazivoda’s Gazivoda Realty, for $27.5 million or $636 per square foot.
Crest, led by Bruno Caruso and Andrew Drazin, bought the 42,857-square foot elevator building in July 2016 from Lazar Gazivoda for $38.5 million, or $898 per square foot. Crest financed the purchase with $25 million in debt from Mesa West Capital.
At the time, the firm told The Real Deal it planned to convert the building into luxury rentals. The firm later said it expected to convert the building to condominiums.
The reduction in value represents the impact of New York City’s rent regulations on developers’ plans.
At the time of the 2016 sale, The Real Deal reported that the building was more than half deregulated. The 2016 city tax bills reflected that, reporting there were 16 rent-regulated units among the 38 apartments.
But in the most recent tax bill issued last fall, the number of rent-regulated units had actually increased to 20, making a conversion that much more difficult.
“This is a prime example of a property that was severely impacted by the Tenant Protection Act,” Robert Shapiro of Cushman & Wakefield said in a statement. “Ownership made substantial upgrades throughout the building in the hopes of converting the property into a luxury condominium, but changes in the law virtually eliminated the ability of ownership to file for conversion. The new regulations, along with the changes to treatment of rent-regulated units, further negatively impacted the value.”
City Department of Buildings records show nine work permit applications totaling $1 million, filed since 2017.
Crest did not comment but provided the statement from Cushman’s Robert Shapiro.
A Cushman & Wakefield team of Robert Shapiro, Brett Weisblum and Ian Brooks represented the seller. Meridian Capital Group’s Amit Doshi and Jonathan Shainberg represented the buyer.
Cushman initially brought the building to market in April 2019, before the passage of the Tenant Protection Act, asking $45 million.
The $27.5 million sale price equates to $717,100 per unit or $636 per square foot, with a capitalization rate of 4.2 percent. It sold with a gross rent multiplier of 16 times, according to the brokers.