Property Titans Join Forces For $170M Valued Stonehenge 57 Building In Sutton Place
Facing fierce neighborhood competition, a pre-war rental gets investor backing for a makeover.
When you are Manhattan’s largest commercial property owner, you don’t mind breaking off a piece of your spoils here and there. SL Green, who are the proud owners of that coveted title, sold a 49 percent stake in 400 East 57th Street to BlackRock’s real estate firm—with plans for an upgrade in the works.
Known as Stonehenge 57, the striking 19 story, 261 unit limestone building on the corner of 57th St and First Avenue has little in common with the circular pre-historic British monument after which it was named—other than its color. Mind you, it was built in 1931 and by New York’s lightening paced development standards, it could be considered ancient. That doesn’t mean it’s been a bad investment. SL Green paid $109 million for it (as part of a portfolio deal) in 2012 with Stonehenge Partner and Wharton Properties and it was recently valued at $170 million. Not a bad return on investment.
New York Community Bank provided a 10-year, $100 million loan at three percent fixed interest rate for SL Green. For BlackRock, the upside is in the long game, providing cash investment and allowing their asset to appreciate.
“The 400 East 57th Street investment fits favorably within our investment strategy given its gateway market location, current income and the potential for future value creation,” confirmed Benjamin Young, managing director and head of U.S. real estate separate accounts at BlackRock Real Assets.
BlackRock plans to partner with SL Green to upgrade units and enhance common areas and amenities. As a result of the transaction, SL Green now owns 41 percent and Stonehenge owns 10 percent of the property. The deal made sense on a number of levels.
Homeowners and landlords on the Upper East Side are experiencing a warm and tingly feeling that has nothing to do with after work cocktails but rather, the advent of the Second Avenue subway line. A slew of new sparkling new buildings have been completed, including The Charles on 1355 First Avenue between 72nd and 73rd St, as well as Lux 74 at 429 East 74th, The Georgica at 305 East 85th St, and The Brompton at 151 East 85th Street. Though many are condos and not rentals, the net effect will be uptick in rents.
“The subway will likely make the Upper East Side and Yorkville less affordable for some residents, and have a ripple effect on local businesses,” said Krishna Rao, a chief economist at real estate web site, StreetEasy, to the NY Post. “There is a trade-off to every public project like this one, as they transform the tenor and fabric of the surrounding area. A premium on transportation is inherent in the pricing of not only Second Avenue, but the entirety of New York City.”
Rents in the area are expected to rise by around $500 a month when the train goes into service, making an average of $3,000 a month. Currently rents at Stonehenge 57 are $2,511 for a studio, $3,495 for one bedrooms and $5,644 for two bedrooms with the three bedrooms rents unavailable. With renovations and a new subway line, residents shouldn’t expect their current rents to last.
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