UPDATED, Aug. 4, 2:02 p.m.: A joint venture between BFC Partners and K&R Preservation acquired an eight-building multifamily portfolio in Brooklyn and the South Bronx for $60 million, sources told The Real Deal. The seller, Black Spruce Management, is pocketing about $17 million after just buying them for $43 million last year.
The five Bronx buildings and three Brooklyn properties span nearly 300,000 square feet and contain 324 apartments. The apartments, which are fully occupied, are all part of the Section 8 housing program.
The affordable housing developers are planning a $12 million renovation – or $40,000 per apartment – that is slated to finish by summer 2017. The Section 8 contract will be renewed and will prevent conversion to market-rate housing for at least the next two decades, according to the developers. The majority of the apartments are one- and two-bedroom units.
The Bronx buildings sold for about $38 million, while the Brooklyn ones sold for about $22 million.
The partnership between Donald Capoccia’s BFC Partners and Francine Kellman and Brian Raddock’s K&R Preservation is known as Preservation Development Partners. BFC is best known for co-developing the Empire Outlets. Together, they have bought and renovated about 2,400 low-income apartments across New York and New Jersey to date.
“All rehabilitation work will be done with the tenants still in place, avoiding any unnecessary relocation costs that are typically associated with work of this caliber,” Kellman said in a statement.
The eight buildings were all part of the 42-building “Three Borough Pool” multifamily portfolio that Normandy Real Estate Partners and Westbrook Partners sold to several different firms last year. Black Spruce, which was the dominant buyer of the portfolio, has now sold all of them.
Black Spruce, led by Josh Gotlib, paid $43 million for this batch in April 2015.
Black Spruce declined to comment.
Rosewood Realty Group’s Aaron Jungreis, who declined to comment, brokered the deal.
The purchase was financed with tax-exempt bonds, with credit enhanced by Freddie Mac through its Low-Income Housing Tax Credit rehab program. The size of the financing was $55 million, sources said.
Sources told TRD the buildings were under contract for about seven months while the developers sought bond financing.
Black Spruce, which has been adding to its Manhattan holdings, recently bought 14 Hell’s Kitchen walk-ups for $110 million.