ITHACA, N.Y. — An apartment complex in the city portion of Ithaca’s West Hill has changed hands in a multi-million dollar sale.
The Chestnut Hill Apartments at 139-57 Chestnut Street were sold for $3.18 million last Friday. Rabco Realty (the Rabinor family) sold the apartment complex to an LLC located in suburban Rochester. The Rabinor family had owned the 60-unit apartment complex since 1977, four years after the buildings opened to their first tenants.
A check of the LLC address shows that it is shared with High Peaks Capital, a commercial real estate investment firm. Principal Derek Carroll confirmed his company as the purchaser of the apartments. “I went to Cornell, and I know the area pretty well. I like this location. It seems like it’s a rough property in a nice area. I like that about it.”
Carroll is a real estate broker and licensed commercial broker who has worked in the industry for years, before becoming his own boss with the launch of High Peaks Capital in 2015. The company serves as an intermediary for investors; those who may want to invest in real estate to diversify their portfolios beyond stocks and bonds, but would prefer to leave the process of acquisitions, renovations and property management to someone else.
“Some of it’s my money, some of it’s my partners. It’s very similar to most large real estate deals. From being in the industry, and doing (commercial) debt and equity for others, most deals that you see happen are some combination of partnerships and passive investors. We pick up properties for nice, stable cash flow with upside, allowing diversification outside the stock and bond markets.” Upside here means that there is potential to make it a more profitable investment.
Notably, the purchase price was well below the county’s assessed value for the complex, $3.85 million, making it appear to be a rare buyer’s bargain in Ithaca’s strong multi-family real estate market. But Carroll downplayed that idea. “It’s assessed a little high, we’re going to go in and get it reassessed. It’s a low-income property, with a lot of delinquency (unpaid rent). We think we paid a little too much.”
The complex has provided lower-priced housing for city residents. While it has had a rather troubled history, there are fair concerns that a new buyer, especially one focused on “upside”, would move the apartments upmarket, displacing lower-income residents. Carroll said that while there are plans to renovate, the plan is to keep the units as lower-moderate income workforce housing.
“We’re going to keep it very similar, there are not a lot of affordable units in Ithaca. We’ll clean it up, do the common areas, make it a little safer. We’ll keep it affordable. There’s a lot of excess land, we think there’s a high demand for units that aren’t Class A luxury. We’re in a good position to make it affordable but nice at the same time,” said Carroll. “It’s nothing dramatic, we’re keeping them affordable. Nothing extreme.” Carroll added that the Chestnut Hill Apartments would likely be renamed as part of a rebranding, partly an effort to move on from its difficult past, and partly to give it a fresh image to go with the renovations.
The county clerk’s records show that alongside the sale and deed filing, High Peaks Capital was granted a $2.86 million construction loan from Syracuse-based Empower Federal Credit Union. A breakdown of fees and costs shows that most of that will go toward the acquisition costs (i.e. like a mortgage), but at least $316,000 of the loan is earmarked for renovation costs.
With the apartment complex now among his company’s assets, Carroll expressed optimism in both the Chestnut Hill property and in Ithaca. “We think there’s a lot of upside to turn it around and get the income back up to where it should be. I absolutely would buy more properties in the area if the right opportunity comes up.”