Bobby De Niro's got some new neighbors. In late September, Chicago-based Waterton Residential announced it had closed on a deal to take over 88 Leonard, a 22-story, 352-unit apartment tower in the Tribeca neighborhood of Manhattan that De Niro (among other high-profile celebrities) famously calls home. The acquisition is Waterton's second in New York City, but it represents the company's first footprint in Manhattan proper, made possible through some creative dealmaking to buy 88 Leonard's ground lease.

“Our overall strategy right now is to buy well-located assets with a story—that story can run the gamut from a traditional value-add with an interior rehab play to a marketrecovery play,” says Waterton vice president of acquisition Max Peek. “In this case, there were a number of story lines that were present, not least of which was the ground lease. In fact, the ability to acquire the lease-hold interest was one reason this opportunity had limited [takers] we were up against."

Waterton is acquiring the lease-hold interest in two stages, with the first closing completed on Aug. 31 and the second scheduled for February 2012. All in , Waterton will acquire the 90-year term lease for approximately $540,000 per unit after deduction of the commercial and parking valuation. “The ground lease has a long-enough term, and we were comfortable enough with the economic terms, that we're comfortable with the underwriting," Peek says. “The property is encumbered with bonds, so it's financeable. If the term were anything less than 90 years, I don't think we would have pursued it."

Built in 2007 by Africa Israel Investments, a subsidiary of AFIUS, 88 Leonard features a 24-hourattended lobby, interior and exterior fireplaces, a 14th-floor garden and sun deck, and a landscaped terrace with a 20-foot whirlpool spa, billed as the largest spa in the state. “The amenities were one thing that drew us,” Peek says. “The spa alone is like a Melrose Place hot tub—a very unique amenity in terms of marketing that plays very well and, coupled with the other amenities, even competes with condos."

In the end, though, it was location that made a deal for 88 Leonard's lease-hold so appealing to Waterton as the firm looks to expand in the New York City market. “We view Tribeca as one of the preeminent submarkets in one of the best investment markets in the world,” Peek says. “This location is what we call ”˜trophy core core.'"

ia media-type="image"> Waterton Residential