Summit expands in New York residential market

Zohar Levy

With a local partner, a Summit Real Estate unit has bought properties containing 490 apartments in the city, and is looking for more.

Income-producing real estate company Summit Real Estate Holdings Ltd. (TASE: SMT), which is active in Europe and Israel, continues to expand its business in the US as well.

The company announced this morning that, through a subsidiary, it had signed an agreement with a local partner to buy ten residential rental buildings in New York, containing 490 apartments. The deal is worth $89 million.

The buildings contain 42,000 square meters of space and nineteen commercial units. Average occupation is 97%, and annual revenue, on the basis of existing leases and after operating expenses, is $4.5 million. Summit will finance the purchase with $26 million of its own equity and $63 million external credit. The deal is expected to be completed within the next few weeks.

Summit is providing 85% of the capital required, and the local partner 15%. Summit says that the local partner is experienced in the residential rental market and will be responsible for management and maintenance of the properties. The cash flow from the properties will be divided according to the amount of capital provided until the investment reaches payback and an agreed IRR is achieved. From then on, the partner will be entitled to success commissions.

Summit also says that, with its local partner, it intends to expand its holdings in residential rental properties in New York, in the boroughs of Manhattan, Bronx, Brooklyn, and Queens.

Summit chairperson and controlling shareholder Zohar Levy said, "We believe in the economic strength of New York and plan to focus on the city. The residential rental market in the city is large and enjoys stable demand on the part of tenants, which makes it possible to obtain a steady cash flow with potential for substantial rises in value. At the same time as investing in residential rental properties, we also recently reported a first investment in hotels in New York, and so far the company has acquired a portfolio of over 500 rooms in the most attractive locations, and we are acting to expand this activity too."

Published by Globes, Israel business news - en.globes.co.il - on April 25, 2021

© Copyright of Globes Publisher Itonut (1983) Ltd. 2021

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