Anonymous Starrett City investors cash out at $1.8B value, double 2018 price

By Adam Pincus

An unidentified group of institutional investors sold an approximately 71 percent stake in Starrett City, the 5,881-unit Brooklyn housing complex also known as Spring Creek Towers, at a valuation of $1.84 billion, according to city property records, more than twice the value of its 2018 sale at $904.6 million. The transfer occurred on August 20, 2021, city records show.

This is the largest property sale recorded in New York City since Google purchased 75 Ninth Avenue in Chelsea for $2.4 billion in March 2018. And it is the largest multifamily sale recorded since Blackstone Group bought Stuyvesant Town and Peter Cooper Village in 2015 for $5.3 billion, according to a PincusCo analysis of city property records. PincusCo is not including the recently announced Google purchase of St. John’s Terminal, since the sale has not appeared in public records.

This is, however, a partial interest sale, and the controlling interests are not changing. The complex is owned by a group of investors led by Brooksville Companies and Rockpoint Group which bought the 46-building complex in East New York, in May 2018 for $904.6 million.

The Starrett sale is part of a complex series of transactions that were dated June 30, 2021, in city records, which included a refinancing, an agreement to maintain affordability at the complex for decades, and the sale. The complex opened in 1974 and is described as the largest federally subsidized housing development in the nation. It is mostly residential but includes a portion of retail space.

A Cushman & Wakefield team of Douglas Harmon and Adam Spies, who negotiated the 2018 deal, were the advisors on this new deal as well, according to sources.

The properties provide affordable housing to residents of the Mitchell-Lama project through rent caps for the 2,312 non-section-8 units, and section 8 housing vouchers for residents of 3,569 units.  Former Governor Andrew Cuomo in a July 2021 press release said the complex will remain affordable through at least 2069.

In the June series of agreements, the owners committed to adding another $140 million in rehabilitations on top of $140 million that was pledged at the time of the 2018 purchase. The new rehab work should be completed by 2030, the agreement Cuomo announced said.

The June deal also more than doubled the debt on the property, from $501.5 million provided at the time of the 2018 acquisition, to $1.07 billion now.

There was very little city tax paid on the sale of the affordable housing portion of the transaction, but there was full tax paid on the retail portion of the complex, which sold for $34.64 million, a fraction below the $35 million sale price in 2018. There was full state transfer tax paid on all the properties.

The entities controlled by Brooksville and Rockpoint accounted for $1.588 billion of the total transaction, or 86.5 percent and the Belveron Partners portion was $248.3 million, or 13.5 percent of the total $1.84 billion. There was tax paid on 66.67 percent of the Rockpoint and Brooksville, $1.588 billion stake, and tax paid on 100 percent of the Belveron stake, implying the entire Belveron stake was sold. It was not known what institutional or sovereign funds sold or bought in the “club” transaction. Brooksville declined to comment. The other parties did not respond to requests for comment.

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