A New York City-based real estate company has purchased the 360 State St. apartment tower for a whopping $160 million — which is nearly $45 million above the high-end high-rise’s latest city-appraised value.
That company is called Beachwold Residential.
According to the city’s online land records database, on Tuesday, a Beachwold-controlled holding company called Ansonia State Street LLC bought 360 State St. from MEPT Chapel Street LLC for $160 million.
The 500-unit luxury apartment complex opened in 2010. It stands 32 stories tall at the corner of State and Chapel Street. And it was previously owned by a union pension fund-backed outfit called Multi-Employer Property Trust (MEPT).
During the latest citywide property revaluation, the city appraised the four separate parcels that make up 360 State St. — including the 500-unit apartment tower, the ground floor commercial space occupied by the Elm City Market grocery store, the 500-space parking garage, and an adjacent empty lot on Chapel Street — as worth a combined sum of $115,071,261. That’s $44.9 million less than what the property sold for on Tuesday.
In a Wednesday afternoon phone interview with the Independent, Beachwold Residential CEO Gideon Friedman said that his family-owned company already has 6,000 apartments across Connecticut, including, up until earlier this year, the 124-unit Liberty apartment building on Temple Street.
“We’ve known about 360 State forever,” Friedman said. “When the opportunity came when we could add it to the portfolio, we were very excited” to do just that.
$10M Repairs En Route
He said that his company plans on making “a pretty substantial investment in the property” over the coming years.
First, he said, Beachwold plans to spend $7 million over the next year to do “a big renovation of all the common spaces, the lobby, the pool area, and the common area next to the pool.” He said these improvements will bring “new hallways, a new fitness center, new co-working spaces, new areas around the pool.”
The second big planned renovation, he said, is a new fuel cell that will enable 360 State to generate electricity onsite. The building’s original fuel cell is now “at the end of its useful life.” He said it hasn’t operated for the past couple of years. He said that adding a new fuel cell to the building will make it more energy efficient.
Then, Friedman continued, his company plans to spend $2 million inside the apartments themselves. “As they turn over over the next couple years,” he said, the new landlord will add “new flooring, new plumbing, new lighting fixtures, [and] window blinds” to the apartments, as well as a new key fob system.
Finally, he said, Beachwold plans to invest roughly $1 million in other maintenance work, including fixing cracks in the garage concrete.
Why embark on such extensive and expensive building upgrades for a tower that was constructed only a decade ago?
“It’s in very good condition,” Friedman said about the high-rise as it stands today. “We just wanted to modernize the amenities to help compete with some of the new properties that came online in Wooster Square” and elsewhere downtown in recent years.
“360 State is such an icon,” he said. “We think it needs a next-generation” set of improvements.
What about that long-vacant vacant fenced in lot on Chapel Street closer to Orange Street? What does Beachwold plan for that space?
“We would love to be able to do something, to partner with a restaurant group or community group on a temporary or permanent basis,” he said. He said his company is meeting with city officials next week to talk about how that space could be used. He envisions a “holidary market or farmers market” if not an outright restaurant.
Friedman said that the Elm City Market grocery store will stay in place even with this change in property ownership.
The Independent asked Friedman for his take on what has quickly become a defining theme of high-end real estate transactions in New Haven: a gaping disparity between the property’s official appraisal for tax purposes, and the amount of money that a private real estate investor is actually willing to spend to buy that same property.
“The city’s looking at it as the value today,” Friedman said when asked about why his company paid nearly $45 million more for 360 State than its city-appraised value. “And we’re looking at it as the long-term value for us and the return we can get on a building like this” given the improvements his company plans to make.
“The city has to value it as a snapshot,” he added. “We take a much longer look. We’re going to be a long-term holder of this property.”
Friedman also said that 96 percent of the tower’s 500 apartments are currently occupied.
Does his company plan on raising rents?
“Our rents are going to stay where they are,” Friedman said. “As the market moves, we’ll adjust to the market. New Haven, like the rest of the country, [has seen] a real run-up in rates” in recent years. But “we’re going with that expectation that rents” will stay where they are now because of a general cooling in rents.