NEW YORK CITY-An East Harlem housing complex will be preserved as affordable for the next 40 years, GlobeSt.com has learned. Preservation Development Partners, a joint venture of developers Donald Capoccia, Joseph Ferrara, Brandon Baron, Francine Kellman and Brian Raddock, completed the rehabilitation of East River Apartments, a 179-unit multifamily apartment complex in Upper Manhattan.
The apartment complex, located at 109-125 E. 130th Street, consists of five elevator-equipped buildings. According to data from Real Capital Analytics, Preservation Partners acquired the complex in January 2012 from seller Tricham Housing Associates LP for $36 million.
Kellman tells GlobeSt.com that the seller at the time was looking to sell to a regular rental operation, and that would have taken the property out of Section 8. “It’s very important to us to try and preserve as much Section 8 in the city as we can,” she says. “So much of it has been lost, especially in Manhattan. A lot of the properties several years ago went out of Section 8 and took advantage of the high prices, so there really isn’t too much left. It was really important for us to maintain the affordability, stabilize the community and stabilize the property. It is a living, breathing entity, these buildings, and that’s the way we look at it. We work with the tenants, we work with the surrounding area, we work with the nonprofits and with government as well.”
The purchase and rehabilitation of East River Apartments was made possible through the use of tax-exempt bonds issued by the New York City Housing Development Corp. and credit enhanced by Freddie Mac through its Low Income Housing Tax Credit Mod Rehab program. The project will also be capitalized with debt and equity financing providing by Wells Fargo.
The rehabilitation cost was approximately $31,000 per unit. Work included the repair and installation of new roofs, boilers, compactors, flooring, windows and facades. In addition, individual units were upgraded with new kitchens and bathrooms. The complex comprises 53 one-bedroom units, 47 two-bedroom units, 59 three-bedroom units, 17 four-bedrooms units and two five-bedroom units.
The multi-million dollar improvement project was completed in less than 10 months after acquisition by the developer last January. All of the tenants in the fully occupied complex were allowed to remain in their units during the rehabilitation.
East River Apartments also benefits from a 20-year federal project-based Section 8 contract, which will be renewed for an additional 20 years, ensuring the long-term affordability of its units for low-income families – which Kellman says is an important factor to the JV.
“East Harlem has changed quite a bit,” she says. “Now that the economy has gotten a little bit better, there has been a lot of development going on, and a lot of the development is not necessarily affordable. There are a lot of luxury buildings going up. Every part of this city is being gentrified one way or another. East Harlem is one of those neighborhoods that started and stopped with the economy as it went down and has picked up again.”
All 179 units at the project will be set-aside for tenants earning no more than 60% of the area median income—and thus far, residents are giving the improvements the thumbs up. “The tenants are happy and we’ve got new management in there, so we are very pleased with the progress that we’ve made,” she says.
Preservation Development Partners is a partnership formed by K&R Preservation and BFC Partners. Prior to forming K&R, Kellman and Raddock closed on two affordable housing properties in the Bronx and Manhattan for a Seattle based developer.
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