18A — September 13 - 26, 2019 — M id A tlantic
Real Estate Journal
www.marej.com
M id A tlantic R eal E state J ournal
continued from page 2A Apartment Occupancy . . .
OOD B R I DG E , NJ — The Kislak Company, Inc. an- Lupo orchestrates sales of properties totaling $33.3M Kislak completes 290-unit multifamily exchange in NJ &PA W ments was RRG Castle Club Apartments LP and the pur- chaser was New Ausonia LLC and New Belmont LLC.
zynski. “Younger cohorts, on the other hand, are renting at considerably higher rates than historical precedents ... Millennials have delayed mar- riage and children.” However, even strong de- mand might not be enough to keep the apartment sector strong if the economy slows. Developers are still building a tremendous number of new units. “Construction trends are near peak levels of delivery and starts still high,” said Rice. The number of new apart- ments opening is likely to stay very high at least through the next year or so. “Completions are not expected to really tail off until at least 2021,” said Rybczynski. “Census data shows that starts are slowing, and if that continues, then the seeds have been sown for a taper in two or three years.” Bendix Anderson is a freelance journalist and has written about commer- cial real estate, sustainable development and afford- able housing for more than a dozen years. not referring to normal wear and tear on a component of property. We’re talking about complete neglect on the part of the owner, to the point that the property component has deteriorated and is entirely non-functional. For example, imagine that a farmer has three outbuildings on his land for storing equip- ment and materials, and that he decided he only needs two. He completely neglects upkeep on the third, so that it falls into a state of disrepair and is not fit to store expensive equipment. If he eventually realizes he does indeed need three outbuildings, costs incurred for restoring the third outbuilding to its original operating condition would be considered restorations, and would require capitalization. The TCJA may be new, but the TPRs remain an important part of a comprehensive tax plan, and should not be over- looked. Due to the complexity of the regulations, property own- ers are advised to consult with tax advisors to ensure that the all savings opportunities have been identified. Bruc e A . John s on , CRE, is a co-founder and partner at Capstan Tax Strategies. Bruce works closely with commercial real estate owners and ac- counting firms to provide practical, creative, and customized engineering- based tax solutions.
Economists have become increasingly worried about the possibility that the U.S. economy might slow down. The threats include of an escalating trade dispute with China and tremors in the bond markets. But demand for apartments is still very strong. “Low un- employment lead to better wage increases in 2018 than any other part of the cycle,” said Andrew Rybczynski, se- nior consultant with research firmCoStar Portfolio Strategy. In addition, larger demo- graphic forces continue to boost demand for apartments. The aging of the population will lift the number of households age 65 and over by 11.1 million over the next decade, which in turn will increase the number of households consisting of ei- ther single persons or married couples without children by 8.4 million, according to analysis from Doug Ressler, director of business intelligence for data firm Yardi Matrix. “There are more older rent- ers than ever,” said Rybc- A cost would be considered a restoration if it is paid for the: •Replacement of a com- ponent of property after the taxpayer deducted a loss for that component •Replacement of a prop- erty component that was sold, assuming the taxpayer has adjusted the basis of the com- ponent based on gain/loss real- ized from the sale •Replacement of a property component after the taxpayer claimed casualty loss •Restoration of a property component to like-new condi- tion, after the end of its class life •Replacement of a major component or significant por- tion of a UoP, building system, or subset of UoP that has its own discrete function Costs incurred when return- ing a property component to its ordinary operating condition would also be considered res- torations, and would therefore require capitalization. It’s important to note that this doesn’t refer to normal main- tenance performed to manage normal wear and tear, as in the roof example discussed above. In that case, the cost of the new roof was not consid- ered a betterment and could be expensed. When we’re talk- ing about restorations, we’re
strong rental market. At the time of closing, Ausonia Apart- ments was fully-occupied. Arbor Grove Apartments is a two-story brick garden style apartment complex with pitched roofs containing 104 residential units and 12 garag- es. Built in 1953, the property is located just 20 minutes from King of Prussia and Exton. The property includes spa- cious one and two bedroom floor plans ranging in size from 650 to 825 s/f, some with new kitchens. On-site ameni- ties include off street parking, laundry facilities, courtyards, and 24 hour emergency main- tenance. Many roofs were recently replaced. Castle Club Apartments is also a two-story brick garden style apartment complex. The property contains 158 residen- tial units with a mix of one-, two- and three-bedroom units. It is located minutes away from Interstate-95 and the Pennsyl- vania Turnpike approximately 25 minutes from Princeton, New Jersey and Center City Philadelphia. Some of the apartments had recently been renovated. Apartment amenities include fully-equipped kitchens, wash- ers and dryers, air conditioning with individual climate control, and balconies or patios. Prop- erty amenities include con- trolled building access, beauti- fully landscaped grounds with courtyards and picnic area, a community room, swimming pool and fitness center with additional storage available. Lupo joined Kislak in 2014 and specializes in the sale of multifamily and other invest- ment properties in New Jersey and eastern Pennsylvania. He was the recipient of the firm’s 2015 Rookie of the Year award and 2018 Sima Kislak Jelin Salesperson of the Year award. Lupo has become one of Kislak’s leading salespeople with investment sales totaling more than $250 million.
nounced the recent com- pletion of a three-prop- erty I.R.C. Section 1031 like-kind ex- change f or $33.3 million in New Jer-
“This series of transactions is a clear demonstration of the importance of Kislak’s real estate advisory role in the multifamily investment mar- ket,” said Lupo. “The sellers of Ausonia and Arbor Grove made a strategic decision to market the properties with us on an exclusive basis, subject to an exchange. Concurrently with our marketing program, it was imperative to leverage our client relationships in order to identify an ideal exchange property. The purchasers of Arbor Grove and Ausonia also trusted our ability to complete the sales in a timely manner. The sellers of Castle Club, who also have a long term relation- ship with Kislak, understood the importance of satisfying the exchange as the timing provided an opportunity for a quick and quiet disposition of their asset.” Ausonia Apartments is a five-story mixed use building with 26 residential units, two ground floor retail units and four rooftop cell phone towers. Built in 1950, the property is located in the heart of down- town Highland Park, New Jer- sey, within walking distance to an abundance of commercial offerings and Rutgers Univer- sity’s New Brunswick campus. The building includes eleva- tor service to each floor and the unit mix consists of studios, one- and two-bedroom apart- ments ranging in size from 600 to 1,000 square feet. All units feature 10-foot ceilings, large closets, ceiling fans, and hard- wood floors through¬out; and the building includes on-site laundry facilities. Significant capital improvements had re- cently been completed by the seller. Highland Park is a desirable community centrally located in Middlesex County with a
Justin Lupo
sey and Pennsylvania. The exchange consisted of the fol- lowing transactions. - The $5.3 million sale of Ausonia Apartments, a 26- unit multifamily property with two commercial units located at 501-505 Raritan Avenue in Highland Park, Middlesex County, NJ; - The $8 million sale of Arbor Grove Apartments, a 104-unit multifamily property located at 957 and 960 Hale St., 941 North Warren and 990 Wash- ington Street in Pottstown, Montgomery County, PA; and - The $20 million sale of Castle Club Apartments, a 158-unit multifamily property located at 254 West Trenton Avenue in Morrisville, Bucks County, PA. The seller of Ausonia Apart- ments, and Arbor Grove Apart- ments, which previously pur- chased the properties through Kislak in 1999 and 2002, re- spectively, purchased Castle Club Apartments. Kislak was engaged on an exclusive basis to sell Au- sonia Apartments and Ar- bor Grove Apartments with vice president Justin Lupo handling the assignments on behalf of Ausonia Apartments Partnership GP and Belmont Apartments Partnership LLC, respectively. He also procured the purchasers of the proper- ties, 501 Raritan Ave LLC and Arbor Grove Realty LLC, and arranged the off-market sale of Castle Club Apartments in order to complete the exchange. The seller of Castle Club Apart-
Passing the BAR: Exploring . . . adapting a portion of the prop- erty to a different use. R is for Restoration continued from page 8A
IRVINGTON, NY — An investor group formed by James K. Coleman of Hou- lihan-Parnes Realtors, LLC and Edmond DeLau- rentis, Jr. of DeLaurentis Management Corporation have arranged for the pur- chase of three multi-family properties located in White Plains and Irvington. The properties contain a total of Houlihan-Parnes Realtors arrange 3 building purchase 110 apartments and 13 retail stores. 111 North Broadway (State Rte. 9) is a three-story brick converted mansion containing 17 apartments and an on-site parking lot in Irvington. 177 Grand St., A/K/A 104-108 East Post Rd. is a five-story mixed use elevator apartment building containing 57 apart- ments and nine ground floor retail stores in White Plains. 82 Bank St., A/K/A 95-107 Fisher Ave. is a five-story mixed use brick apartment building containing 36 apart- ments and four ground floor retail stores in White Plains. Long term financing for the purchase of these properties was arranged by Jerry Hou- lihan of Houlihan-Parnes Properties.
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