A $1.3-billion bid last year byClipper Equities was blocked by the Federal Department of Housingand Urban Development, after it said the acquisition wouldjeopardize affordability of the 5,800-plus apartments on thesite.

|

When asked if he expects a similarly priced bid after thememorandum, Neveloff says, "my expectation, is there will be somechange, but we'll see. That's what the free market is."

|

Likely bidders could include joint ventures between a group withan affordable-housing focus and another entity interested in itscommercial space, including a 142,000-sf shopping center and vasttracts of developable land. "What you'll see is a more focusedgroup of buyers," Neveloff says.

|

Hugh Finnegan, an attorney in the real estate group at Sullivan& Worcester LLP, tells GlobeSt.com that the list of potentialbuyers for Starrett City has now been made more narrow thanbefore.

|

"For example, opportunity funds are far less likely to beinterested because the property cannot be fully repositioned tosufficiently increase cash flow," he says. "The amount of upsidefrom the property has been reduced."

|

Finnegan continues to note that the price has to be lower thanit previously was "because of the limit of upside and because ofthe credit crunch, thus requiring more equity than under theoriginal deal," he says. "It is unlikely that any offer will matchthe Clipper [Equities] price."

|

Deborah Jackson, executive managing director of Weiser RealtyAdvisors LLC, tells GlobeSt.com that there are a number ofquestions to be asked regarding Starrett City. She explains thatany investor is going to look at achieving the best return thatthey can. In the past, there has been a market for affordablehousing as an investment, she says. "Similar to any otheracquisitions, investors would look for a property of quality thatis well located, has good demographics, and is well leased. Shouldthese items be present, then the return to the investor would behealthy." She notes that "not all housing needs to be marketed tothe wealthy to have a good return--or bottom line."

|

With that said, she says that "the pool of investors may bediminishing as they step back to see if a delay might result inbetter pricing. Additionally, funding is becoming more difficult,"noting that the period to obtain funds has increased and often theamount of capital required of the borrower has increased.

|

In regard to potential investors, Jackson tells GlobeSt.com,institutional investors might be one candidate because they havecash. It might be a good purchase for one of the state of New Yorkpensions, she says. She adds that she isn't so sure if the recentruling will impact pricing, however she says that the economymight.

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Natalie Dolce

Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.