80 DeKalb, first Brooklyn residential tower from Forest City, is sold again, by Brookfield. Rising rents, but also construction site next door.

Forest City Ratner's first residential building in Brooklyn, the 36-story 80 DeKalb (aka DKLB BKLN) flanking Fort Greene Park near Downtown Brooklyn, has been sold again, for $190 million.

The 365-unit building, with 20% affordable units, was finally completed in 2009, according to this 3/30/11 Forest City credit agreement, which cited $200.2 million in total requisition costs.

Separately, this Forest City Enterprises annual report, dated 1/31/10, cites a $163.3 million expenditure, with 80% ownership. That translates to $204.1 million.

The news

KKR, Dalan buy Downtown Brooklyn rental tower from Brookfield for $190M, the Real Deal reported yesterday. That involves not just the investment firm KKR--which, fun fact, just bought Atlantic Yards in Atlanta--but also Dalan Management.

It's not the first transaction. As I reported in June 2018, Forest City Realty Trust--the successor to Forest City Enterprises, parent of Forest City Ratner/Forest City New York--along with Madison International Realty bought out the 49% owned by National Real Estate Advisors.

The transaction valued National's share of the property at a total of $93.5 million, including assumption of debt, suggesting the total project value of $190.8 million. At that time, the building--according to a 2008 estimate--was supposed to cost $207.3 million to build.

That said, such valuations are complicated by different financing streams and assumptions.

New owners, new sale

At the end of 2018, Forest City was absorbed by the conglomerate Brookfield, which has been strategically selling assets.

The Real Deal framed the deal as an opportunistic one for KKR, given that market-rate rents in Brooklyn are rising.

That said, Brookfield claimed, according to the article, a "strategy to recycle capital out of well-performing assets while seeking new value opportunities."

One factor Brookfield may have considered: the construction site immediately adjacent to 80 DeKalb, at 625 Fulton, is set for a 35-story tower with 1,098 units. 

So construction noise could make working from home at 80 DeKalb more challenging, and the new building could diminish views from some southern-facing apartments.