Related Companies is moving forward with its $200 million acquisition of a U-Haul site at West 23rd and 11th Avenue in Chelsea.
The firm, which first entered a purchase and sale agreement for the site in October 2015, is now expected to close on the deal after gaining zoning approval from the city. The company plans to build a 22-story mixed-use building with 140 residential units.
Las Vegas-based Amerco, which has owned the assemblage since 1980, will retain a three-story U-Haul building on the property. The firm bought the property for $5 million. Related’s planned tower will replace two three-story buildings and a one-story structure.
According to Jason Berg, Amerco’s CFO, his firm was skeptical that the sale would clear regulatory hurdles.
“We had our doubts as to whether or not we would clear zoning and everything would get finalized,” he said during a recent earnings call. “So we thought that there was a lot of uncertainty as to whether or not it would finish. But a couple of days before we filed the 8-K, they received final zoning approval from the city. So we feel pretty comfortable now that this is a deal that will close probably sometime in August through September of this year.”
Berg was referring to an SEC filing to announce the possible sale. According to the document, the agreement was amended several times due to regulatory requirements. The company plans to re-invest the proceeds from the sale into its self-storage holdings via a 1031 entity.
Last week, the City Council’s Zoning Subcommittee heard testimony on Related’s application for a zoning amendment at the site. The planned building will have 288,000 s/f of space. Related also plans to have retail and gallery space on the ground floor.
As part of the deal, Amerco will transfer 70,000 s/f of unused floor area from the U-Haul building to the Related site.
Manhattan Community Board 4 disapproved of the project with a unanimous vote of 26-0. However, the zoning amendment was approved by both Manhattan Borough President Gale Brewer and the City Planning Commission.