J.S. Karlton Inc. of Greenwhich, Conn., is said to be pursuing a deal to purchase the Union Square Apartments in Boston’s Allston neighborhood.
An onslaught of interest in the condominium market reportedly is spurring another bulk sale of multifamily units in Boston, with a Connecticut firm said to be negotiating to purchase more than 150 condos at the Union Square Apartments in Allston.
According to industry sources, J.S. Karlton Inc. of Greenwhich, Conn., is deep in discussions with Forest Properties Management to acquire units that Forest principals purchased in the mid-1990s at the hulking brick property. “They are working on it,” one local real estate professional insisted of the sale, although that source and others could not say whether a binding agreement has been inked. Calls to Forest Properties official Jeffrey A. Libert were not returned by press deadline, while J.S. Karlton President Phil Restifo declined comment on the situation, citing a confidentiality agreement.
“I can’t really discuss anything at this time,” Restifo told Banker & Tradesman on Friday in a brief phone call from his firm’s headquarters.
If a deal is consummated, it would be the second time in barely a year that J.S. Karlton has purchased a block of Boston residential units to sell as condominiums. In the previous instance, the firm paid just over $40 million for the top half of 226 Causeway St. in Boston’s North Station district. As part of the original developer’s agreement, several of the 108 luxury apartments were set aside for affordable housing, but the remainder have seen considerable attention on the residential sales market, said Kevin Ahearn of Otis & Ahearn, the Boston-based firm that has overseen the marketing campaign for J.S. Karlton.
“The interest has been excellent,” said Ahearn. Only a handful of the units remain for sale at the six-story complex, which was renamed Strada234 after J.S. Karlton purchased the asset from Intercontinental Real Estate Corp. of Brighton. Ahearn would not discuss the Union Square situation, including reports that his firm would be hired to market any units purchased by J.S. Karlton.
The potential sale is just the latest chapter for the 10-story property, which was built by Boston developer Ronald F. Cahaly in the 1980s amidst neighborhood complaints that the structure was too large for the surrounding neighborhood. Originally constructed as apartments, the building was converted to condominiums in the early 1990s after the regional recession of that time had a negative effect on the city’s rental market. Only a handful of units were sold individually after the conversion, however, with Forest Properties acquiring the bulk of the units in 1994 and continuing to lease them as apartments.
At this point, it is unclear exactly what the sales price of any deal with J.S. Karlton would be, or how much the firm expects to get individually for the units. Several of the Strada234 units have fetched more than $1 million, including one condo that sold for $1.6 million. According to one condominium specialist familiar with both properties, the Union Square asset would likely be considered less valuable than 226 Causeway St. due to both its age and its location farther away from downtown Boston. Even so, the broker, who requested anonymity, predicted Union Square would attract solid interest from potential buyers.
“It’s in the middle of everything,” said the broker, who also noted the property offers close proximity to such educational institutions as Boston College, Boston University and Harvard University. The source claimed the Karlton negotiations involve 155 residential units and several commercial condos also owned by Forest Properties officials.
Condos Hit New Heights
If a sale is completed, it would continue a rash of acquisitions of multifamily buildings locally during the past year, with an emphasis on condo conversion strategies. Whereas much of 2002 and 2003 saw investors buying apartment properties to retain as rental operations, 2004 has yielded a different strategy, with observers attributing the shift to lower interest rates that are favoring home ownership.
Whatever the motivation, several prominent properties in Boston have been purchased this year by condominium converters, including a complex adjacent to Strada234 that has for years been used as office space. Among the more aggressive players arriving on the scene has been Crescent Heights Inc., a Miami-based firm which has been particularly bullish on Greater Boston. After buying the CambridgeSide Apartments in Cambridge earlier this year and launching a conversion program, Crescent Heights recently completed the blockbuster sale of the Museum Towers apartment complex in Cambridge, a few blocks from the CambridgeSide development.
Crescent Heights paid more than $145 million for the 435-unit Museum Towers. It has since renamed the two-building complex as the Regatta Riverview Residences and is offering units to buyers at prices starting in the $300,000 range. Along with a $10 million capital improvement campaign, Crescent officials are promoting the property’s prime location near downtown Boston and amenities such as a fitness center, private theater and 24-hour concierge service.
