Starrett City sold for $1.3B.

The 10-week bidding war for the 140-acre subsidized Brooklyn housing complex, Starrett City, came to an end this week with news that Brooklyn-based Clipper Equity had won with a $1.3 billion offer.

"We are delighted to have purchased this attractive, desirable development," said David Bistricer, who formed Clipper Equity along with partner, Sam Levinson, specifically for the deal.

The housing complex--which continues to be known as Starret City despite officially changing its name to Spring Creek Towers in 2002--is the largest federally subsidized rental complex in the country. It includes a total of 46 towers containing 5,881 apartments and has its own schools, churches, synagogues, shopping center and post office.

Starrett City Associates--the group of limited partners led by Disque Deane that have owned the complex for the last 35 years--put the complex up for sale last November. Deane said a total of seven bids were made and three were the subject of lengthy interviews before a final selection was made. He said the owner's desire to protect affordable housing led to an intense search for the right buyer, adding, "We have dedicated ourselves to running a pristine, affordable complex for working New York families, so we are pleased that the new owners plan to continue running an affordable development."

Although Bistricer said that Clipper Equity was committed to preserve long-term affordability at the complex, experts have warned that in order to make a healthy return he may have to compromise some of Starrett City's historic position as a provider of homes for working and middle class families through the Mitchell-Lama program, which provides tax breaks to developers.

"There will not be an immediate profit, because Starrett City has been under the Mitchell-Lama program since it opened in 1975," explained Jaime Heiberger-Jacobsen, president of Heiberger & Associates.

As the property was the subject of a 30-year Mitchell-Lama deal, Heiberger-Jacobsen said the new owner can opt out of the program and raise the rents to market rates. "I would assume that, in doing that, they would develop the vacant land, and that would have a major impact on their returns," she added.

The sale of another massive affordable housing complex so soon after the city's biggest complex at Stuyvesant Town went to the highest bidder last month has raised more concerns about the future of affordable housing in New York City.

The Housing and Preservation Department said its investigations had shown that Bistricer had clocked up 8,792 outstanding housing maintenance code violations at the 71 properties he already owns around the city, a situation Mayor Michael Bloomberg described as "worrisome" during his weekly radio address.

David Eyzenberg, president, Prodigious Capital Advisors, LLC, who grew up in Starrett City, speculated that the new owners might also find attempts to develop the vacant parcels hindered by the city and state.

"If that is the plan, then it would take a lot of time for the land to be rezoned because it would need state and city approval."

Darcy Stacom and William Shanahan of CB Richard Ellis marketed Starrett City for Starrett City Associates and Kramer Levin Naftalis & Frankel LLP represented the owners in this transaction.