Clock Ticks on Sale of Huge Brooklyn Housing Complex
- Sep 08, 2008
The finish line is in sight for the competition to acquire a nearly 6,000-unit Brooklyn apartment complex that will command the highest price for a U.S multi-family property this year and rank among the biggest transactions in any category. Early next month, a winning bidder should emerge for Starrett City, a 34-year-old, nearly 6,000-unit complex located on Jamaica Bay. Unsettled credit markets and declining commercial property prices in New York City make predictions difficult, but local industry players have suggested that the property could command close to $1 billion. If so, the sale’s price tag would exceed all New York City transactions this year except for a handful of high-profile office sales, such as the $2.8 billion acquisition of the General Motors Building in Midtown Manhattan by a Boston Properties Inc.-led team. But Starrett City also stands out because of its status as the nation’s largest federally subsidized housing complex. About 60 percent of its tenants qualify for rent subsidies under the federal Section 8 program. Concerns about the complex’s continued affordability culminated last year in the U.S. Department of Housing and Urban Development’s rejection of a $1.3 billion bid from Clipper Equity L.L.C. The new owner will be expected to comply with a memorandum of understanding requiring the property to remain affordable for at least 20 years. The Sept. 25 bid deadline was pushed back from early September to give HUD time to calculate the future rents of the property, said a spokesman for Recap Advisors L.L.C., which is marketing the property for owner Starrett City Associates. Those figures will enable the bidders and their lenders to property target give the bidders and their lenders settle on pricing. The Recap spokesman confirmed that four teams remain but declined to identify their members. According to widely circulated reports, however, the remaining candidates include combinations of national commercial real estate investors and local non-profit groups. The team with the most members includes Westbrook Partners, the Metropolitan Council on Jewish Poverty, the New York City Central Labor Council, Citigroup and Touro College. Also reported to be in the running are Greater Allen A.M.E. Cathedral Housing Corp. in joint venture with JPMorgan Chase; Housing Partnership Development Corp., Cogsville Group, Clarett Group, the Christian Cultural Center and Aimco; and NHP Foundation along with The Related Cos.