We spent $104 million turning an abandoned 19th-century college in NYC into luxury apartments
Developers spent $104 million converting a 150-year-old former college building in NYC into luxury apartments, facing major structural challenges including connecting old and new sections while digging foundations. The project is currently 50% occupied with all cash flow going toward debt service.
Summary
This project involved transforming an abandoned 19th-century college building in New York City into luxury residential apartments with a total investment of $104 million, exceeding the initial $95 million budget. The developers encountered significant structural engineering challenges, particularly when connecting the historical wing to a new building section. The most complex aspect was excavating a 20-foot deep foundation for parking while preventing the 150-year-old structure from collapsing into the excavation site. The original building was in severe disrepair, with water damage so extensive that it would rain inside when it rained outside, requiring substantial capital investment just to make it habitable and safe. The property transition involved complex tax implications, as it was previously owned by the Catholic Church and benefited from religious tax exemptions. The developers negotiated a lot split arrangement where the church maintains its tax exemption while the residential portion is taxed at standard real estate rates, resulting in approximately $700,000 annually in property taxes. Currently at 50% occupancy, all rental income is being allocated to service bridge debt, though developers expect positive cash flow once higher occupancy levels are achieved.
Key Insights
- The developer states that connecting a 150-year-old building to a new structure while digging a 20-foot foundation hole was the biggest challenge, as the old building wanted to fall into the excavation site
- The building was so deteriorated that when it rained outside, it would also rain inside due to extensive leaking throughout the structure
- The project required a huge commitment of capital just to make the building minimally functional, safe, and habitable before any luxury renovations could begin
- The final project cost reached $104 million, which was $9 million over the initial budget of $95 million for the complete development
- At 50% occupancy, all cash flow from the building currently goes toward bridge debt service, but developers expect positive cash flow after expenses once higher occupancy is achieved
Topics
Transcript
[0:00] We still have to finish the rooftop and just some little things in the courtyard, but other than that, I mean, the building is fully complete. I guess the the biggest challenge we encountered was uh connecting the older wing to the new building. In order to create the new building, you have to dig the foundation for the new building, >> 150-y old building and a 20ft hole. And the building wants to fall into the hole. Why we had to build a big hole was for the parking. You'd walk through, you know, some of this building and when it would rain outside, it would rain inside [0:30] and the building was leaking. It was a huge…
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