(Bloomberg) -- A vast, four-decade-old affordable-housing complex in Brooklyn that counted President Donald Trump as an investor has been sold for $905 million.
The buyer of the 15,000-resident development best known as Starrett City is a joint venture of Brooksville Co. and Rockpoint Group LLC. They completed the deal Monday after getting approval from state and federal regulators, including the U.S. Department of Housing and Urban Development, which is headed by Ben Carson, a Trump appointee.
Starrett City “represents a very stable and safe investment” in the long run, Andrew MacArthur, president of Brooksville, said. “I view it as akin to a bond.”
The seller is Starrett City Associates, a partnership that owned the complex since it opened in 1974 and that faced a January 2020 payment on the mortgage’s outstanding principal, according to court records. Some of the partners claimed in a lawsuit, dismissed this year, that the sale price could have been higher.
Trump, who wasn’t among the plaintiffs in the suit, held a 4 percent stake in Starrett City Associates, according to a financial disclosure filing made last June with the U.S. Office of Government Ethics. In the year of the filing, he received more than $5 million in income from the 46-building complex, renamed Spring Creek Towers in 2002. The property includes 5,881 apartments just north of the Belt Parkway, a major thoroughfare.
To secure the approvals, Brooksville and Rockpoint agreed to invest $140 million in capital improvements, including the rebuilding of a power plant on the site, MacArthur said. They also agreed to extend the complex’s affordable-housing status, with HUD’s Section 8 program remaining in place for an additional 20 years, through 2049. New York State’s Mitchell Lama protections will extend another 15 years, through 2054, MacArthur said.
“If anything, we received significantly more scrutiny in the HUD process,” he said. “Civil servants inside of HUD were very focused and understood the type of scrutiny this transaction would receive.”
Before completion of the sale, the buyers met at least 15 times with tenants of the complex, addressing their concerns that it remain affordable, MacArthur said.
Apartment buildings in Brooklyn are a popular investment these days. Sales of multifamily buildings in the borough during the first quarter more than doubled from a year earlier, to $887 million, according to Real Capital Analytics Inc. The average price paid per apartment was $362,360, up 2 percent.
One-bedroom apartments at Starrett City start at $1,191, two-bedrooms at $1,460 and three-bedrooms at $1,783, according to the property’s website, with tenants selected based on income guidelines.
The buyers are financing half of the purchase through a Fannie Mae loan, MacArthur said.
Douglas Harmon, chairman of capital markets for brokerage Cushman & Wakefield, advised the sellers on the transaction.
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