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Forest City announces purchase of 500 Sterling, rental apartment in Crown Heights, claims "double digit" return

Photo via Brownstoner
In Forest City Enterprises' Form 10-Q statement submitted to the Securities and Exchange Commission yesterday, the firm announced: "Acquired 500 Sterling Place, a 77 unit apartment community in Brooklyn, New York for cash and a nonrecourse mortgage."

No sale price was announced for 500 Sterling, in the western part of Crown Heights near Prospect Heights, which as Brownstoner reported in February, set neighborhood rent records and was fully leased.

The only report I could find of the sale to Forest City (from the developer Adam America) was in the blog BK to the Fullest, which on 2/28/15 reported:
Speaking of Sterling Place, across the street at 500 Sterling Place it was news that they're now fully leased and broke neighborhood rental records with their studios over $2,200/month. Even more newsworthy to us is Forest City buying it for just over $48M last month. That's right. We didn't stutter. Nobody wanted to pay over $5M for this dirt (except one), but now it just sold for over $48M, or over $600K/unit. We been watching it since day one, and still can't believe that number.
The Real Deal in January did report the sale, albeit without the name of the buyer:
Adam America Real Estate has sold a 77-unit residential rental building at 500 Sterling Place for $48 million, The Real Deal has learned. The property, located between Washington and Classon avenues and bordering Prospect Heights, was completed in June. Rents start at $2,000 per month. Adam America bought the property out of foreclosure, together with Horizon Group, for $6.8 million in 2012, and received a 421a tax on the project. Representatives for Adam America declined to name the new buyer.
(Update: a reader points me to this account from March of very high heating bills, which were being reimbursed at least in part by the management company.)

"Opportunistic acquisition"

In a conference call with investment analysts this morning, Forest City Enterprises CEO David LaRue called it "an opportunistic acquisition... in a great market." He said they were able to negotiate an "attractive" acquisition price.

Though he would not disclose any specific numbers, LaRue said, "as we bought it and financed it, we’re receiving a return on our equity in double digits... It’s a newer property that we expect good results from."

It certainly could complement the Atlantic Yards/Pacific Park development not so far away in Prospect Heights, and signals Forest City's confidence in the Brooklyn residential market. Forest City built 80 DeKalb but otherwise has not bought finished apartment buildings.