Clipper Realty announces 40-year regulatory agreement with NYC HPD

Clipper Realty announced a 40-year regulatory agreement between its 2,500-unit Flatbush Gardens property and the New York City Department of Housing Preservation and Development, or HPD, under Article XI of the Private Housing Finance Law. For the term of this agreement, the project will receive a full abatement of real estate taxes, commit to maintain current rents and to make capital improvements over a three-year period, among other matters. Flatbush Gardens is a 59-building complex located along Foster Avenue between Nostrand and Brooklyn Avenues in the East Flatbush neighborhood of Brooklyn acquired by an affiliate of the company through its predecessor in late 2005. The complex was constructed around 1950 and contains 2,494 studio, one-bedroom, two-bedroom, and three-bedroom apartments, and four below-grade garages over 21 acres. All leases at the property have been rent stabilized since inception and registered with the Division of Housing and Community Renewal, or DHCR. As a part of the agreement with HPD to receive the Article XI tax exemption, Flatbush Gardens has committed to a three-year capital improvement plan at the property, maintenance of rents within current categories based on area median income, a set aside of vacant units for formerly homeless households, and an increase in pay rates of non-union employees at the property to prevailing wage guidelines. The three-year capital improvement commitment could amount to approximately $27M and follows improvements over the last three years of about the same amount. This transaction is expected to be accretive to our AFFO and FFO. The Company partnered with the NYC Housing Partnership as not-for-profit sponsor for the project.