Hudson Hill Partners, a White Plains-based real estate investment management firm, has built up its portfolio to 10 Westchester properties with the acquisition of five properties over the summer at a combined cost of $4.6 million. It now has small apartment buildings and a vacant red brick warehouse built in 1907, which is due to be converted into apartments, in New Rochelle, Mamaroneck, Rye Brook, Ossining, Sleepy Hollow, Tarrytown and Hastings-on-Hudson.
“We approach these transactions in a very similar way as I would have done for a $300 million new-build tower in Milan that I worked on,” Dan Bsharat, the company’s managing director, told the Business Journal. “We complete our underwriting and do our due diligence in a very systematic way. This is not a ‘mom and pop’ operation. This is really an institutional basis.”
The properties attracting Bsharat’s attention are what he terms “underappreciated properties with historic charm that need a little help in maximizing their potential.”
Bsharat, who founded Hudson Hill Partners with his brother Tariq in 2017, said their concept has been to find smaller buildings within walking distance of train stations. They don’t mind if the buildings are in need of some renovation.
“We’re really focused on the smaller-sized properties because we love the downtown main street revival story that’s going on across Westchester,” Dan Bsharat said.
“I originally had gotten out of school and worked in New York in the real estate development side, but soon after went to do my MBA at Oxford in 2012. I worked in London for a private equity firm focused on real estate. Shortly after that, I ended up at the Abu Dhabi Investment Authority where I was investing on a global scale in development and real estate investment projects,” Dan Bsharat said.
In addition to managing a $1.2 billion portfolio of existing developments, he worked on putting $750 million into additional development projects.
The Abu Dhabi Investment Authority is a sovereign wealth fund founded to invest on behalf of the Emirate of Abu Dhabi. Its portfolio was estimated to have a value of $679 billion in July of this year.
Tariq has experience in real estate development, investment analysis and asset management in the United Arab Emirates and the U.S.
“My brother and I are from Harrison originally, so we are Westchester guys. We come from an institutional background, but we still find a compelling story here in Westchester from a real estate investing perspective,” Dan Bsharat said.
He said money from the Middle East did not follow him and his brother into Westchester.
“It would have been nice if it did, but we create these investment vehicles to purchase each and every property. Most of the investors are local, at least from the Northeast of the U.S. We do have some overseas investors, but they are individuals, not institutions,” he said.
He said Hudson Hill Partners structures the finances on a typical deal to include equity from investors along with its own equity and funds from a senior lender.
“These smaller deals are under the institutional radar to a degree, so we’re not competing with large institutional investors, which helps in terms of trying to secure deals more quickly,” Dan Bsharat said. “The other factor here is there’s something to the charm of some of the historical properties we’ve been purchasing.”
Bsharat said they want to focus on middle-income housing rather than the luxury end of the market.
“We let the developers building the larger projects bring all this new luxury to the market,” he said. “We’re really focused on middle income where you have a much greater pool of people who can afford these apartments. We have one-bedrooms usually in the $1,500 to $2,000 range and we have two-bedrooms between $1,000 and $2,400.”
He said when they’re shopping for properties they want to make sure that major infrastructure and structural upgrades will not be required. “Most of the buildings we buy are improved through unit-by-unit renovation. We don’t need to clear out the building and gut. We ensure that everything is code compliant. We’re improving the kitchens and bathrooms, but what we’re not doing is tearing down walls and rewiring and replumbing the building,” Bsharat told the Business Journal.
While he and his brother form the core of the business, they have a cadre of trusted contractors and handymen who work with them on the renovations. They also outsource property management.
Westchester’s rivertowns have proven to be especially attractive for Bsharat. While living with his wife and baby in Sleepy Hollow, he finds that the area along the Hudson River has been a magnet for millennials leaving New York City.
“We’re really bringing the global experience that we’ve had down to the local market. If the local market opportunities present themselves that allow us to grow out of the New York metro area into other markets, or larger deals and larger development projects, we’ll certainly follow that trail. Right now, we’re having too much fun working on these downtown projects where we’re really preserving the existing housing stock,” Bsharat said.