“Whitney Modern” Luxury Apts. Sold For $18.5M

A newly built 42-unit East Rock luxury apartment complex sold for $18.5 million to a New Jersey-based investor duo that has poured tens of millions of dollars over the past year into New Haven real estate — in the latest example of the city’s housing market overflowing with cash, at least for those buying and selling.

The apartment complex is located at 703 Whitney Ave.

It consists of three separate but adjacent buildings on a single 1.3‑acre parcel of land. Those include a new-construction 35-unit apartment building dubbed the ​“Whitney Modern”; a century-old mansion and former home to the American Red Cross that has been converted into seven apartments; and a carriage house-turned-amenity space with a lounge, gym, and game room for tenants.

The 42-unit luxury complex, which was spearheaded by lead developer Nancy Greenberg, first opened its doors to tenants in October 2020 — at monthly rental rates of between $2,000 and $3,000 per month. The city hosted a celebratory ribbon cutting for the new-construction-and-historic-rehab apartments in February of last year.

Thanks to a surging multi-family rental market and some deep-pocketed investors, the property has now changed hands for $18.5 million — which translates to the eye-popping $440,000 per unit, or around $480 per rentable square foot.

The new owners of the property are holding companies controlled by Lakewood, New Jersey-based investors Shloime Rosenberg and Shlomo Katz.

According to the city land records database, on Dec. 1, Rosenberg and Katz’s holding companies Whitney Ventures LLC, Whitney Ventures II LLC, and Whitney Ventures III LLC bought the 42 apartments from 703 Whitney LLC for $18.5 million.

The (then-undeveloped) property last sold for $1.6 million in 2016. 

Per the latest citywide property revaluation, the city last appraised 703 Whitney Ave. as worth $8,603,900 — which is less than half of what it sold for last December. 

New Owners: We Love New Haven's "Current & Long-Term Outlook"

Rosenberg and Katz have emerged as two of the biggest spenders in New Haven’s rental market over the past year, snapping up large apartment complexes at elevated prices.

In addition to this most recent 42-unit, $18.5 million purchase, Rosenberg and Katz’s companies spent $21 million in January 2021 buying a 137-unit Upper Westville apartment complex at 35 and 145 Cooper Pl. They spent $50 million in December 2020 buying the 294-unit ​“Westville Village” apartment complex at 400 Blake St.

In total, that’s $89.5 million that the two have spent on acquiring 473 local apartments in just a 12-month span.

City land records show that Rosenberg and Katz’s company pulled a $15,244,000 mortgage for the newly-bought 703 Whitney Ave. property on Dec. 6 from Greystone Servicing Company LLC.

In an email comment provided to the Independent Tuesday morning, Katz touted their companies’ professional bonafides.

“SRK Management is an owner/operator of a wide spectrum of quality multifamily housing,” he said. ​“We pride ourselves on providing communities that meet and exceed our tenants’ needs. We have made significant investments in New Haven and have always believed in the strong past and future of New Haven and the quality of life that New Haven provides for its residents.”

Asked about their plans for the property, he said, ​“instead of focusing on repositioning older properties and raising rental rates, we have always focused on acquiring quality properties, curing deferred maintenance, and improving on existing conditions and amenities. … We have no plans to significantly alter current operations at the Whitney Modern, and we do not plan to increase asking rents as a business plan.”

Why invest so much in New Haven?

“We love the current and long-term outlook for the City of New Haven. We believe that the world-class hospital system, bio-medical research and development, education system and diverse population and culture will continue to provide for stable and sustainable modest growth. We look forward to continuing to invest in New Haven’s commitment to growth, excellence, and quality of life by providing quality rental housing and amenities to our residents.”

New Haven isn’t the only rental market these investors appear to be betting on. 

According to the South Florida real estate news site The Real Deal, in December, a handful of Rosenberg’s companies sold three buildings containing 309 apartments to a California-based investor for $59.3 million. That was nearly $20 million higher than the $39.8 million Rosenberg’s companies spent buying those same 309 apartments two years earlier.

All of this has taken place as the nation has seen skyrocketing real estate prices during the pandemic, and — closer to home — as large investor-landlords have tapped into major private lenders and international financial markets to help fuel their expansions.

"Fantastic Year To Own Multi-Family Properties"

Larry Link — who is the president of the New York City-based real estate brokerage Level Group, and who was Greenberg’s business partner in the development of 703 Whitney Ave. — told the Independent that his company could not pass up on selling the Whitney Avenue apartments for the price offered by Rosenberg and Katz.

“It’s just been a fantastic year to be an owner of multi-family properties,” he said. 

“We built this thing with a lot of love,” he said about 703 Whitney Ave. And — thanks to the juxtaposition of new construction with historic renovation; the density in an area dominated by large single‑, two‑, and three-family homes; and the property’s location in the heart of the East Rock neighborhood — it wound up fetching quite a high price.

“It was not necessarily as profitable” as his company was hoping it would be, Link said about the $18.5 million sale. But ​“it was a profitable venture.” (Link declined to say exactly how profitable it was for his company.)

Asked for his thoughts on why the property sold for more than double the city’s most recent appraised value, Link cautioned against thinking of municipal appraisals as equivalent to the true value of a property on the open market.

The former is based primarily around how much in property taxes a government can collect on a property, he said. The latter is based on a complex set of private-market pushes and pulls — how much money a rental property generates, how much it cost to build, how much it costs to run, how much money can be made on short‑, mid‑, and long-term investments.

“Cities, they do the best they can” in trying to appraise a property as close to its true market worth as possible, Link said. But the city can’t ​“squeeze” a property for every dollar it’s worth, he cautioned, or else a municipality might become less attractive of a place for developers to build and invest. He also said that when the city appraised the property, it was working off only a year’s worth of rental data — a relatively limited dataset given how profitable the property should be in the years to come.

What can he say about the new owners, Rosenberg and Katz?

They run a ​“top-quality operating company,” he said. ​“Very experienced. Very savvy.” And they clearly have identified New Haven’s rental market as a worthwhile venue to plunk down a lot of money.

“It’s a great place to invest,” he said.

"There's Just So Much Money Out There"

Carol Horsford, who runs the local commercial real-estate brokerage Farnam Realty Group as well as a rental management company, said that a number of factors likely influenced 703 Whitney’s sale at such a high price.

For one, the apartments are brand new.

Investors are ​“looking for a finished product like that, that’s brand new construction,” she said. ​“People pay a ton, a ton of money for that, because of the way they can get financing. The better the product, the better the bank loan.” 

That means the buyers can likely borrow money at relatively low interest rates from private lenders and banks alike to purchase buy the property and keep the cash flowing. 

“The stable the asset, the lower the interest rate from the bank,” she said.

Another reason is that $440,000 per unit may seem very high for New Haven — but for deep-pocketed investors trading in real estate elsewhere in the country, particularly in New York City, this may seem attractively affordable. 

A third reason is that the new owners are clearly seeking to achieve some kind of economy of scale by buying up lots of apartments in relatively few complexes in one relatively geographically concentrated area: that is, New Haven.

“The more you manage in one place, the more scalable the infrastructure is,” she said. For example, if you have 100 units of housing, you need to pay one person in the office and maybe one full and time and one half-time maintenance person. If you add another 100 units, that would likely necessitate only one, or even one-half, more maintenance workers.

“Investors want to buy where they can get mass,” she said. ​“Everybody’s looking for scale. The larger the apartment complex, the more desirable it is.”

Another factor may be zoning. She said that New Haven’s relatively tight zoning laws often limit the amount of housing that can be built on any given parcel of land. ​“You can build 42 units for the same price you can build 66 and get more rental income,” she said. Since the former owners won permission from the Board of Zoning Appeals only for 42 new apartments at 703 Whitney Ave. in 2017, that drove the per-unit price up.

What about the new owners paying more than double the city’s appraised value for the site?

Horsford pointed out that the city’s revaluation of properties is undertaken largely by the contractor Vision Appraisal. ​“It’s a company going around” offering a ​“bird’s eye view” on how much they think every property in the city is worth, she said. 

There are market conditions that ​“are not tangible” that the city’s appraisal process often misses out on, she said.

The big one at this point in time: ​“There’s just so much money out there that people are willing to pay higher prices for things.” 

Because of that glut of cash, she said, ​“the market is willing to spend way more than the thing might be worth.”