NEW YORK CITY—Clipper Realty completed refinancings of existing debt on its Flatbush Gardens complex comprising 59 buildings in Brooklyn, and the two building Tribeca House apartments. With these deals, the vast majority of the company's debt is now fixed at low-interest rates, according to the real estate company's CFO, Larry Kreider.

“These refinancings are an important step to lowering our overall cost of capital while extending the maturities of the instruments. With these transactions, annual debt service is initially reduced by approximately $6.6 million consisting of a $3.5 million reduction in annual interest expense and a $3.1 million reduction in annual principal amortization,” says Kreider.

He notes the net proceeds from the transaction provides greater liquidity and will assist in delivering the company's value-add strategy.

Clipper Realty refinanced Flatbush Gardens with a 10-year $246 million initial fixed-rate secured first mortgage loan with New York Community Bank, the property's current lender. The loan matures in February 2028. It has a fixed-rate annual interest of 3.5% for the first five years and is interest-only for 30 months.

Flatbush Gardens has addresses including 1403 New York Ave. and 3301 Foster Ave. in Brooklyn. The cluster of six-floor buildings total 2,496 units. They were purchased in 2005 from Emmes in a joint venture with LACERA for approximately $138.5 million, as mid- and high-rise subsidized property, according to Real Capital Analytics.

The real estate company refinanced its Tribeca House properties with a 10-year $360 million fixed-rate secured loan which matures in February 2028. It bears interest of 4.506% per year and is interest-only for the entire term. The lending institution for this transaction is not being disclosed at this time.

In December 2014, Clipper Realty purchased the Tribeca House apartments, consisting of 50 Murray St. and 53 Park Place, nearly adjacent buildings for $518 million from Sapir Organization. The buildings were constructed in 1964 and have a total of 504 units. The sale and architectural information is noted in Real Capital Analytics.

With the proceeds, Clipper Realty repaid the Tribeca House loans totaling $410 million due November 2018 and the Flatbush Gardens mortgage loans totaling approximately $168 million due October 2024, having an interest at a fixed 3.875% annual rate. The net remaining proceeds of $21.5 million increased Clipper Realty's cash position, which will support execution of its strategic plans.

The 50 Murray St. apartments were the subject of 421-g litigation. In January, an appellate court allowed luxury deregulation of the rents at 50 Murray St., which had been a rent-stabilized building having received 421-g tax benefits.

In addition to the recently refinanced buildings, Clipper Realty also owns and manages property at 1955 First Ave. in Manhattan, 141 Livingston St. and 250 Livingston St. in downtown Brooklyn, and 107 Columbia Heights, also in Brooklyn.

Instant Insights /

Clipper Realty Completes $606 Million Refinancing in Flatbush and Tribeca

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