Partners Buy Hurricane Sandy-Affected Apartments, Plan Rehab
- May 30, 2013
New York—The Community Development Trust (CDT), a private REIT that provides capital for the preservation of affordable housing, has partnered with Proto Property Services to buy and rehab Ocean Towers in the Coney Island section of Brooklyn. Ocean Towers is a 360-unit property located on West 24th St. between Mermaid and Surf Avenues, originally constructed under the Mitchell-Lama Housing Program in 1973, a state initiative responsible for the development of over 105,000 apartment units.
The $52 million project will preserve affordable apartment units in an area hit particularly hard by Hurricane Sandy, according to the developers. While CDT currently owns nearly 5,000 units of affordable housing throughout the United States, Ocean Towers represents its first acquisition in New York City.
Proto, an affordable housing developers that has completed the rehab of more than 1,200 occupied units in New York City, including two large-scale properties in Brooklyn, will serve as the managing member, general contractor, and property manager for Ocean Towers. Proto will be responsible for major system replacements to extend the building’s useful life.
The project will include conversion from electric heat to natural gas heat with new high-efficiency boilers installed above Sandy flood levels, individual electric meters, and a full elevator replacement. It will also mean a new building entry, parking lot resurfacing, a new entry gate, new unit entry doors and various common-area improvements. Residents will remain in place throughout the renovations, which are expected to be completed in about 18 months.
The purchase and rehab are being funded with $10 million of equity from CDT and Proto, as well as a $35 million acquisition loan originated by Enterprise Community Loan Fund, a subsidiary of Enterprise Community Partners, through the New York City Acquisition Fund (NYAF). Managed by Forsyth Street Advisors, the $150 million NYAF is a collaboration among Enterprise, the city of New York, major foundations, and public and private community investment groups, to provide flexible capital for this kind of project in the five boroughs. The $35 million acquisition loan for Ocean Towers is the largest transaction originated through NYAF.
The project will also receive an additional $4.5 million of funding through the NYC Department of Housing Preservation and Development through its Article 8A Loan Program, which provides rehab loans to prolong the useful life of dwellings in New York City. Upon the completion of the improvements, Ocean Tower’s rents will be regulated under New York City’s rent stabilization guidelines.