Reynolds Terrace Apartments at 248 Reynolds Terrace in Orange — Courtesy: Gebroe-Hammer Associates
By Joshua Burd
A private investor has purchased a 120-unit apartment building in Orange for more than $22 million, brokers with Gebroe-Hammer Associates announced, touting the firm’s completion of nearly $1 billion in multifamily investment sales during the first half of 2022.
According to the brokerage team, Executive Managing Director David Oropeza and Executive Vice President Stephen Tragash represented 248 Reynolds Group LLC in the sale of Reynolds Terrace Apartments. The property at 248 Reynolds Terrace, built in 1966 and continually updated, traded for $22.285 million, thanks in part to its value-add potential, its proximity to Manhattan and the greater Newark area and its access to a vast network of highway and mass transit options.
The collection of studio, one-bedroom, two-bedroom and three-bedroom apartments last changed hands in 2019, for $16.65 million, in a deal also brokered by Oropeza and Tragash.
The latest sale comes as part of a six-month stretch in which Gebroe-Hammer brokered 56 deals with a combined value of more than $979 million. The Livingston-based firm’s transactions in the first half of 2022 comprised 4,587 units across the northern New Jersey and greater Philadelphia regions, thanks largely to “unquenched” demand from Generation Z renters and would-be millennial homebuyers who are priced out of the single-family housing market.
“Since the post-World War II apartment-building boom and every challenging market cycle thereafter — at least those that have occurred in the past 47 years that I’ve experienced — multifamily properties have always proven to withstand economic and geopolitical headwinds better than any other real estate sector,” said Ken Uranowitz, Gebroe-Hammer’s president. “Moreover, inflationary periods drive investment strategies toward real estate assets where apartments are at the top of the food chain due to their inherent stability as a human need for shelter in a rising rental environment.”
He added that, as interest rate hikes cool the single-family home market, “the ceiling on rents seems limitless and occupancies are at record levels as unaffordability is forcing people to rent.” Demand for apartments “continues unabated and at historic highs, far exceeding pre-pandemic levels. Values and cap rates will adjust accordingly based on increased debt-service costs but should not have any impact on transactional activity.”
Uranowitz also pointed to the massive amounts of available capital craving multifamily investments, from institutional and private equity buyers to family offices and high net-worth individuals.
“During the first half of the year, many legacy owners realized that taking chips off the table sooner rather than later would be the wisest choice,” he said. “This is especially prescient with the ‘R-word’ and additional rate hikes in the offing — two conditions they have lived through in past cycles.”
Gebroe-Hammer’s deal closings in recent months have involved a mix of multifamily asset types, ranging from garden-style and low-rise properties built before the 1970s to value-add and new construction midrise and high-rise properties, the firm said. All were located in high-population density urban-core and suburban edge-city municipalities across New Jersey and greater Philadelphia.
The deals include the $63.5 million trade of Northwood Estates Apartments, a 253-unit garden-style community in North Brunswick, and the $14.5 million sale of Summit’s Beech Spring Village Apartments to mark the completion of a 1031 like-kind exchange. The team also recently inked the sale of Ridgewood Commons, a 66-unit building in South Orange, marking the fourth time it had sold the property since 1999.
“In New Jersey’s urban and suburban markets, the mass exodus from New York City and its outer boroughs is continuing among those priced out of these markets,” Oropeza said. “These renters-by-choice are now setting their sights across the Hudson River — beyond Hudson County and ‘inland’ — for lower rents and more square footage. These healthy, robust New Jersey submarkets have a lot to offer, the least of which is one-seat rail service to and from Midtown Manhattan and abundant NJ Transit bus options.”
Gebroe-Hammer has also completed several deals in southern New Jersey and greater Philadelphia, having represented clients in Burlington, Camden, Gloucester, Atlantic, Cumberland and Salem counties and in and around Philadelphia since it expanded into the region about 17 years ago.
“In an about-face of previous investment approaches, investors are open to expanding their reach beyond what was once defined by geography,” said Joseph Brecher, an executive managing director with the firm. “We have many sellers attracting out-of-area buyers who are aggressively bidding on for-sale product in order to achieve market diversification. As long as there is a shortfall of supply in many Northeast metros and submarkets, this branching out is expected to continue.”