(Bloomberg) –James Patchett, who last month served as head of New York’s Economic Development Corp. stepped down, will take the helm of an apartment investment firm targeting a buying frenzy.
Patchett becomes chief executive officer of A&E Real Estate, a landlord that owns and operates more than 15,000 units. The company is raising a $ 1 billion fund to expand its reach across the city at a time when property values are falling due to record vacancies and larger, well-heeled investors are staying away.
“We’re talking about that moment in New York City when institutional capital is afraid of New York for the first time in 20 years,” Patchett said in an interview. “And this is an opportunity for me.”
The Covid-19 pandemic has closed offices and cultural life, sending many New Yorkers on the run for open spaces in the suburbs. This, coupled with restrictive new laws for older, rent-stabilized buildings, has reduced investor appetite for apartments. The dollar volume of multi-family home sales in the city decreased 36% year over year in 2020 report by Ariel Property Advisors. It was the weakest demand in a decade.
Founded in 2011 with the purchase of a distressed 49-unit lot in Brooklyn’s Fort Greene neighborhood, A&E has grown through acquisitions, largely from long-time family owners struggling to keep up with growing maintenance and renovation costs, said Douglas Eisenberg, the company owner co-founder and chairman of the board.
The plan is to continue this strategy while acquiring commercial websites and packages with air rights that can be sold to developers.
So far, A&E has raised 25% of its $ 1 billion target from wealthy investors and pension funds, according to Eisenberg.
“At a moment when other people are running away from New York City,” Patchett said. “We’re running in.”
© 2021 Bloomberg LP