Going with the flow
This just broke on the New York Times.
Charles Barron and his constitutents have nothing to worry about. Starrett City won't be going condo for awhile. The market is waaaay too saturated and the cost of construction is still quite high. Any gentrification that does occur won't happen during Barron's politcal career, in fact it might not even happen in his lifetime.
So why would any investor plunk down $1 billion if they aren't able to develop it and kick the occupants out? Because what makes Starrett City so valuable is the occupants. As it was pointed out, 90% of the units are subsidized by the government. In other words Federal Government is the acting tenant. In other words this complex is laying golden eggs and any investor worth their salt will do anything that could not to kill the goose.
So why is Starrett City Associates walking away from this complex? I suspect it is because they have squeezed every penny they could out that complex through refinancing and tax break. Their people probably did their projections and realized this is far as they could go and this is probably the best time they can cash out until the next cycle. Another incentive is the fact that our commander in chief looks down on federally funded housing and is doing what he can to get rid of it.
So why would anyone want to buy Starrett City? As I mentioned, the guaranteed cashflow of government subsidies is a huge incentive for any investor. For investment properties, it is always about the rent. I know one landlord who loves Section 8 housing because he gets 95% of his rent for his Section 8 building every month on time.
Considering how the stock market is acting and how weak the dollar is, certain types of real estate investments are probably the best options to park large quanties of cash. Not to mention the tax benefits. Federally funded housing is probably as stable as you can get because it looks bad for the Federal government if you have to drag them into housing court for failure to pay rent.
As for subsidized housing getting killed, its highly unlikely that will happen now that the Democrats in control.
Please do not mistake this as a sign that the boom is still on. In fact this is more evidence that this is all over. Professionals like Starrett City Associates are always the last to leave the party because they want to eat and drink as much as they can before they leave. But their exit is timed just right so that someone else is stuck with the bill.
November 30, 2006.”
46-Tower Brooklyn Apartment Complex to Be Sold
By CHARLES V. BAGLI
Starrett City, a 140-acre apartment complex built 30 years ago on Jamaica Bay in Brooklyn as an enclave for working class New Yorkers, is on the auction block, the owners confirmed today.
The complex, whose owners changed its name in recent years to the more chic-sounding Spring Creek Towers, is the largest federally funded rental complex in the country. Its approximately 14,000 residents live in 46 towers on a peninsula with its own schools, churches, synagogues, shopping center, post office and power plant.
The sale by Starrett City Associates, a group of investors, is the latest indication that even bland brick buildings are a sought-after commodity in a booming real estate market that has driven prices skyward for everything from condominiums to tenements. The Starrett City auction follows by two weeks the $5.4 billion sale of Peter Cooper Village and Stuyvesant Town. Tenants there fear the loss over time of an increasingly rare middle class redoubt in Manhattan.
Starrett City is far from flashy Manhattan, but real estate executives still expect the bids for the complex, which has 5,881 apartments, to exceed $1 billion.
It was unclear how much would change under a new owner at Starrett City, which was built by a limited-profit housing corporation under the state’s Mitchell-Lama program as subsidized housing for moderate income workers. About 60 percent of the tenants get direct federal rent subsidies, and another 30 percent benefit from other kinds of government assistance.
According to real estate executives familiar with the property, a new owner could choose to drop out of the Mitchell-Lama program and develop some of the vacant land with new apartment towers.
Charles Barron, the councilman whose district includes Starrett City, said yesterday that he would keep a close eye on the sale. He said he had spoken to the sellers, who assured him that even if a new owner pulled out of Mitchell-Lama, the vast majority of the tenants would be able to remain.
“I’m not going to sit back and let them assure us that everything is fine,” Mr. Barron said. “I’ll be meeting with residents and the new owners to make sure it stays affordable and in the same condition. We don’t want to get duped or gentrified
Charles Barron and his constitutents have nothing to worry about. Starrett City won't be going condo for awhile. The market is waaaay too saturated and the cost of construction is still quite high. Any gentrification that does occur won't happen during Barron's politcal career, in fact it might not even happen in his lifetime.
So why would any investor plunk down $1 billion if they aren't able to develop it and kick the occupants out? Because what makes Starrett City so valuable is the occupants. As it was pointed out, 90% of the units are subsidized by the government. In other words Federal Government is the acting tenant. In other words this complex is laying golden eggs and any investor worth their salt will do anything that could not to kill the goose.
So why is Starrett City Associates walking away from this complex? I suspect it is because they have squeezed every penny they could out that complex through refinancing and tax break. Their people probably did their projections and realized this is far as they could go and this is probably the best time they can cash out until the next cycle. Another incentive is the fact that our commander in chief looks down on federally funded housing and is doing what he can to get rid of it.
So why would anyone want to buy Starrett City? As I mentioned, the guaranteed cashflow of government subsidies is a huge incentive for any investor. For investment properties, it is always about the rent. I know one landlord who loves Section 8 housing because he gets 95% of his rent for his Section 8 building every month on time.
Considering how the stock market is acting and how weak the dollar is, certain types of real estate investments are probably the best options to park large quanties of cash. Not to mention the tax benefits. Federally funded housing is probably as stable as you can get because it looks bad for the Federal government if you have to drag them into housing court for failure to pay rent.
As for subsidized housing getting killed, its highly unlikely that will happen now that the Democrats in control.
Please do not mistake this as a sign that the boom is still on. In fact this is more evidence that this is all over. Professionals like Starrett City Associates are always the last to leave the party because they want to eat and drink as much as they can before they leave. But their exit is timed just right so that someone else is stuck with the bill.
posted by Grunt at
8:31 AM
