PRG Acquires 15 Affordable Housing Buildings
- Mar 03, 2008
By Anuradha Kher, Online News Editor New York–Phoenix Realty Group, a New York-based real estate fund manager, is acquiring and renovating 15 affordable housing buildings with 362 units, located in the Bedford-Stuyvesant neighborhood of Brooklyn, for $96 million.All the apartments will be preserved as affordable housing, and 95 percent of them will be subsidized with long-term Section 8 contracts from the U.S. Department of Housing and Urban Development (HUD).“These projects are very important within the community and have a huge impact on the neighborhood,” Ron Orgel, Phoenix Realty Group (PRG) managing director, tells MHN. “We believe that the preservation of affordable housing is fully worth the tremendous effort and commitment that complicated projects like this require,” says Orgel, referring to the two years it took to negotiate this acquisition.“Of course on the economic side, we benefit because we have a fee sharing agreement with our partner, Shinda Management, and we will own this building for over 15 years, so there is long-term cash flow involved,” Orgel tells MHN.Bedford Stuyvesant Restoration Corp. (BSRC) was seeking a buyer for these projects because “it had defaulted on the mortgage of two of the properties and was unable to complete the HUD process required to restructure the loan,” notes Orgel. The $30-million rehabilitation comes under the direction of PRG Bedford-Stuyvesant Partners, a joint venture of Phoenix Realty Group and New York-based Shinda Management. Over the next two years, each building is receiving new kitchens, baths, flooring, lighting, roofing, boilers, lobbies, balconies, windows and landscaping. Though there will be an increase in rents, the tenants will continue to pay 30 percent of their income, reportedly making a marginal difference to them.“No tenants will be displaced during the renovations,” says Chris Bramwell, vice president of development for Shinda. “To keep families together, each building will set aside hospitality suites so anyone living in a unit being renovated will have access to kitchens and bathrooms.” “BSRC’s main concern throughout the whole process was to preserve the housing, rather than to capitalize on the opportunity to take the properties out of the affordable housing programs. BSRC always had the community’s best interest as its primary goal, and with PRG’s acquisition, that commitment will remain intact,” says Heidi Burkhart, senior director of Eastern Consolidated, which played a crucial role in coordinating efforts between PRG and BSRC.Financing for the acquisition includes tax-credit equity from PRG, tax-exempt bonds and subsidies from the New York City Housing Development Corp., and tax abatements and subsidies from the New York City Department of Housing Preservation and Development.