Manhattan apartment buildings are still piquing the interest of Japanese businesses.
Taguchi & Co., a decades-old dessert maker, has acquired 43 W. 27th St., a 16-unit site in the NoMad neighborhood. The sale price of the deal, which closed Tuesday, was $24.5 million, according to brokers involved with the transaction, which had not yet appeared in the city register by press time.
The seller of the 9-story prewar site was Icon Realty Management, a landlord that has recently struggled to pay off loans tied to many of its rental properties, including No. 43.
As has frequently been the case with the flurry of building purchases by Japanese buyers in recent months, a greatly improved Japanese economy is a factor. But tax incentives based on generous real estate deductions also seem to be playing a part.
“In the past Taguchi bought aircraft for investment, but now it’s buildings in New York,” said Sean Taguchi, the company’s chief executive, through a translator.
And because New York buildings have longer lifespans than their counterparts in earthquake-prone Japan, the potential upsides are greater. “The Chrysler Building and Empire State Building are about 100 years old,” Taguchi added, “but you can still make money from them.”
Founded in 1967, Taguchi & Co., which specializes in cream-filled cakes, has been cooking on other fronts. Last year it purchased Brooklyn Brands, a nine-year-old, Bronx-based group of bakeries that supplies babka and other desserts to clients such as Fairway, ShopRite and Whole Foods. The deal, whose terms haven’t been disclosed, was designed to open up New York markets to Japanese sweets and vice versa, Taguchi said.
But the merger is not connected to the purchase of 43 W. 27th St., he added. And the building’s commercial space, which is currently home to Mexican restaurant Cosmico, has several years left on its lease.
In Japan, owners can claim deductions for depreciated real estate for only five years, unlike in the U.S., where around 30 years is the norm. Also in the world of Japanese real estate, land is considered more valuable than buildings, which further limits how much can be deducted, as the tax breaks are tied to the upkeep of structures.
But in the U.S., and New York in particular, the opposite is true. The city usually considers the building to be the most valuable part of any real estate site, a fact not lost on Japanese investors, said Serene Powers, the real estate agent who represented Taguchi in the deal. In fact, Taguchi instructed Powers to pore through tax records to identify sites with the most appealing land-to-building ratios, a group that in Manhattan tends to be downtown, she said.
The land portion of some sites on the Upper West Side, in contrast, had the larger tax burden, so Powers skipped over them, she added.
No. 43, an elevator, nondoorman building whose 16 units have from one to three bedrooms, seems to offer a good stream of income of its own. A three-bedroom was listed at $13,000 a month in early June, according to StreetEasy.
Taguchi said he plans on buying about 10 more buildings in the city over the next decade, including some office towers. “The worst is now over in the office sector—it won’t go any lower—so the timing is good to buy these now,” he said.
After the acquisition of Brooklyn Brands from its parent company, Astor Group, Taguchi & Co. employs about 850 and has seven production sites, including the new one in the Bronx. The company takes in $250 million in revenue a year, Taguchi said.
For its part, Icon, owned by Terrence Lowenberg and Todd Cohen, who could not be reached by press time, faced a January deadline for $143 million in securitized mortgage debt backed by 18 apartment building, No. 43 being one of them. But at the 11th hour Icon’s lender reportedly granted the company a two-year extension.
C. J. Hughes , 2024-06-07 12:03:03
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