Dalan Managament has about 43 buildings in the city — with 1,200 apartments and a little over 100 commercial units, both retail and office. The company’s rentals are a mix between rent-stabilized and market-rate units. In Manhattan, the majority of them are in the East Village, West Village and Chelsea.
Danny Wrublin discusses some tenant horror stories, his holdings in Phoenix, and more in this month’s Meet the Landlord. [more]
How many NYC buildings does Dalan own?
We have about 43 buildings in the city — with 1,200 apartments and a little over 100 commercial units, both retail and office. A lot of what we target are mixed-use properties in Manhattan and the Bronx. Our rentals are a mix between rent-stabilized and market-rate units. In Manhattan, the majority of them are in the East Village, West Village and Chelsea. They’re largely five- or six-story walk-up buildings with 10 to 45 apartments and ground-floor retail. But there are outliers, like a 164-unit building on 44th Street for which we just bought the ground lease.
What kind of renovations does the firm do on its buildings?
We typically do something different than what the last owner did. That often involves modernizing common areas and building a roof deck. Depending on our partners — sometimes RWN Real Estate Partners and the Praedium Group — we try to hold them for at least five years.
How did you get into the business?
I was an economics major at Duke University, where I graduated in 2003. My father Andrew was running G. Wrublin Company, an electronics company started by my grandfather. We bought our first building in Harlem that year. I was working as a financial analyst by day and, at night, showing apartments at our 15-unit building. I left my job and started bringing in investors. We bought a building with 30 units, then one with 60, and kept going from there. I always liked numbers, but I also liked the physical aspect of real estate.
Do you deal with tenants firsthand?
Over the years, I have. When I started the business, I did everything. I looked at broken refrigerators in Washington Heights. Occasionally now, I come face-to-face with a tenant to discuss a buyout or some significant legal dispute that’s outside of not paying the rent.
What’s the strangest thing you’ve been asked by a tenant?
I received my weirdest request last year. We agreed to buy out a rent-stabilized tenant at one of our West Village properties. He added a clause that he wanted to take the front door with him. This guy literally walked out the front door with the front door and his check in hand.
Do you have any tenant horror stories?
I remember going to one of our buildings on 150th Street to look at a refrigerator that wasn’t working. Next door lived a tenant whom we knew to be dealing drugs. We were in the process of suing to get him out. He heard noise, or heard we were next door. He came out of the apartment and tried to engage in an altercation. The police ultimately came. He later [moved out]. I don’t remember whether he was evicted or left on his own. When we went to renovate the apartment, we took down the walls to the studs and found all sorts of cash. This was sort of my indoctrination into the business.
Do you have any interest in developing?
It’s something we would consider. When things were very bleak five years ago, we were very active buyers of non-performing loans. Those really helped elevate the company to the next level. They ended up being great deals. But one of my regrets is that I didn’t look at any pure development plays. We only looked at loans that were collateralized by existing properties that we could comfortably take over and reposition.
What would it take for you to consider a development project?
Between air rights and zoning, sometimes you fall into it. For example, we have three buildings on the corner of 22nd Street and Sixth Avenue in Chelsea. We have owned two of them for a while, and then two years ago, we found out that an adjacent building was becoming available. All of a sudden, we had the makings of a [potential] development site.
Many Manhattan multifamily landlords focus on Upper Manhattan. Why did you set your sights on Chelsea and the Village?
From 2003 to 2006, we only bought in Harlem, Washington Heights and the Bronx, with a small exception in Chelsea. When the market corrected, we bought notes and started getting a taste of owning more Downtown. The ability to improve the property but also have the rental demand to justify the expense to do stuff really resonated with us. Over the last few years, we slowly sold off essentially everything we owned in Upper Manhattan and the Bronx. There were good opportunities Downtown to make a decent return with the upside of rent growth, which is more substantial than that of Upper Manhattan or the Bronx.
You have 800 apartments in Phoenix and are buying up more. Why Phoenix?
The yields and the cap rates are higher than in New York. The cash flow is better. New York tends to get very frothy and it’s difficult to find quality opportunities. We’re not necessarily looking to be … an expert in 20 markets. But if we can be experts in a couple markets, it’d be better than being stuck in only one.
What neighborhoods would you like to break into next?
We’ve looked in Flushing. We missed out on a deal there last year. We regularly look in Brooklyn. Like everywhere else, it’s gotten expensive. As for myself, I’m moving to the Upper East Side this summer. I bought an apartment and have a baby on the way, so there are a lot of changes.