83 Apollo St, Brooklyn, NY, 11222-3802, US

83 Apollo Street

Asset Description

Jones Lang LaSalle (“JLL”) has been exclusively retained to market the sale of 83 Apollo Street (the “Property”), a new construction, purpose-built shelter containing 145 beds. The Property is located on the west side of Apollo Street between Nassau and Norman Avenues in the dynamic Greenpoint neighborhood of Brooklyn. The 33,882 square foot, 4-story building features ~130’ of frontage and is situated on a 10,400 square foot lot.

Completed in May 2024, 83 Apollo Street a.k.a. “The Continental” is a safe haven shelter which is specifically designed to handle persistent homelessness and those with substance abuse issues. While this shelter is targeted towards housing senior citizens, it is not exclusive to the elderly population. The NYC Department of Homeless Services (DHS) partnered with not-for-profit Breaking Ground to operate and manage the asset. Breaking Ground is a social services organization based in NYC which serves more than 10,000 individuals each year through street outreach, transitional housing, and permanent supportive and affordable housing. Breaking Ground’s total revenues totaled approximately $145M in 2023 which represented a 19% increase over the previous year.

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Attributes

Year built

2024

Building area gross

33,882 sf

Number of floors

Beds

145

Remaining lease term

6 years

Zoning

M1-2

Media

Investment Highlights

NEW CONSTRUCTION / PURPOSE BUILT SHELTER

83 Apollo Street a.k.a. “The Continental” is brand-new construction and purpose-built for shelter use, positioning it as one of the most attractive locations for transitional housing in the City. The shelter has a robust staff of approximately 50 trained members providing housing, security, and healthcare services. The safe haven shelter can accommodate up to 145 men and women and offers private, short-term accommodations (although the length of stay can vary). The facility is fully ADA accessible, has enclosed roof outdoor space, common areas on every floor, and both single- and double bedroom configurations. Finally, the building is equipped with security cameras in the common areas, roof, and outside the residence.

LEASED TO AA CREDIT TENANT

Breaking Ground is a AA-rated, not-for-profit and one of the premier supportive housing operators in NYC. The long-term lease has an initial base term of nine (9) years, of which eight (8) are remaining, and there is no history of lease cancellations for these contracts upon expiration. The average length of stay for residents in the DHS shelter system is 412 days for single adults and 750 days for families, making consistent and durable shelter capacity a mission-critical resource for the City to house its transitional housing residents. Furthermore, this necessity makes it unlikely that the DHS would opt NOT to renew the contract.

STABLE, DEPENDABLE CASH FLOW

The 30-year leasehold is subject to a separate city contract with DHS that is set to expire in June 2030. The lease has an initial base term of nine (9) years, of which eight (8) are remaining, and has 3% rent increases every three (3) years, offering a stable and dependable cash flow. Breaking Ground has a contractual rent obligation of approximately $23M over the remainder of the initial lease term.

DEMAND FOR TRANSITIONAL HOUSING CONTINUES TO RISE

Transitional Housing demand in NYC has expanded at a rapid pace over the past two decades and accelerated since the COVID-19 pandemic, creating a shortage of transitional housing options. HUD reported in Jan-24 that 140,000+ NYC residents were unhoused as of Jan-24 (+59% YOY; +78% vs. Jan-19) and the Coalition for Homeless estimates that the actual amount of homelessness is closer to 350,000+ when accounting for unreported housing needs and individuals who are under-housed. Given these trends, the City has a substantial need for efficient and cost-effective transitional

housing and no facility is better positioned than 83 Apollo to provide this housing.

COST EFFECTIVE AND COST-EFFICIENT HOUSING

In addition to being purpose-built, 83 Apollo is extremely cost efficient, offering housing at a rate of $49/ bed/day. The City is reported to be spending $210/night for housing at the Roosevelt Hotel, suggesting 83 Apollo is 77% less expensive. This cost efficiency both increases the likelihood of a renewal upon lease maturity and providers prospective ownership with a clear path to increasing the base rent over time to reflect market levels.

REAL ESTATE TAX ABATEMENT

The real estate taxes are fully abated due to the 30-year leasehold condominium structure.

EXCEPTIONAL LOCATION / REAL ESTATE

The asset is well-located in the Greenpoint neighborhood of Brooklyn, NY, providing long-term optionality as the submarket continues to develop.