Taconic Investment Partners and Apollo Real Estate Advisors Acquire 983 Brooklyn Apartments to Spur Affordable Housing; $40 Million Set for Capital Improvements The Joint Venture, Supported by The Housing Partnership, Will Rejuvenate East New York's MeadowWood at Gateway

NEW YORK CITY, Sept. 12 - Taconic Investment Partners and Apollo Real Estate Advisors have acquired nearly a thousand unsold residential condominium apartment units at MeadowWood at Gateway, a mid-rise housing complex in the East New York section of Brooklyn, and will market them with special financing packages to middle-income homebuyers.

The acquisition comprises 983 one-, two- and three-bedroom apartments at the complex, which consists of 19 buildings on 21 acres in two campuses along Flatlands Avenue, a short distance from the Belt Parkway. The units were purchased from The Lightstone Group.

Taconic and Apollo have earmarked $40 million for major capital improvements to the apartments and common areas, according to Charles Bendit, a principal of Taconic, which successfully revitalized nearby Seaview Estates in Brooklyn's Canarsie neighborhood a few years ago.

"This is a very large-scale community rejuvenation program designed to make quality homes accessible to middle-income residents who otherwise lack affordable home ownership opportunities in this city," says Mr. Bendit. "The Housing Partnership and the city's Department of Housing Preservation and Development, together with New York Community Bank, have helped make the program possible with innovative acquisition, development and end-loan structures for qualified buyers.

"We do not envision this as a gentrification project, but rather as the revitalization of a community for the people of East New York and nearby communities," Mr. Bendit emphasizes.

The Housing Partnership Development Corp., one of the nation's largest non-profit agencies working in support of affordable housing, will "provide homeownership training, secure state subsidies to keep the homes affordable, and help all residents who are interested in purchasing their units," says its president and CEO, Daniel E. Martin. "We look forward to working with Taconic, Apollo, HPD and others to bring affordable homeownership opportunities to the residents of MeadowWood at Gateway, and to increase the supply of quality affordable housing in New York City."

Richard Mack, Apollo managing partner, says, "MeadowWood at Gateway complements Apollo's strategy of investing in the residential and affordable housing sector in our home market of New York. We see significant opportunities throughout the city, in Manhattan and the boroughs."

Earlier this year, an Apollo partnership acquired the Lafayette Boynton and Lafayette Morrison complex in the Soundview section of the Bronx. Apollo is converting the 1,865 Lafayette units to affordable co-ops. The firm also recently purchased Delano Village, an 1,800-unit rental complex in Harlem.

Mr. Mack notes that East New York has experienced substantial revitalization over the past several years with increasing household income and home ownership, as well as the development of new for-sale housing.

Apollo partner James H. Simmons observes that MeadowWood at Gateway "is situated at the epicenter of the neighborhood's revitalization," in the Spring Creek section of East New York, within a quarter mile of the new 640,000-square-foot Gateway Center retail development, and directly across the street from the site of over 800 new single and multi-family homes that are just breaking ground. "These factors make the property an ideal candidate for our development program," he says.

MeadowWood at Gateway was originally built as a rental development in the 1960s as part of the Mitchell-Lama subsidized housing program. It was converted to condominiums in the 1990s, following expiration of the development's Mitchell-Lama benefits. However, at that time, only 167 of the 1,152 apartments were sold, with two units allotted for use by superintendents.

"Not surprisingly, the unsuccessful conversion had adverse consequences for the property and its residents," says Ari Shalam, Taconic's director of acquisitions. "The goal of our project is to make MeadowWood at Gateway a showplace for what public-private collaboration can achieve in revitalizing a community with affordable upgraded housing and amenities in a family-oriented environment."

Mr. Shalam points out that the property is near the Starrett City housing development, with its stable middle-class tenant base, strong sense of community and its own shopping center, schools and recreational facilities.

To encourage as many current MeadowWood at Gateway residents as possible to purchase their apartments, insider discounts will be offered, says John Weir, the Taconic Investment Partners executive overseeing the redevelopment. Although exact terms haven't been determined yet, he anticipates that the apartments will range in price between $100,000 and $300,000, before insider discounts, "with special financing and subsidies for qualified buyers to make mortgages available on very favorable terms to facilitate ownership for local residents," Mr. Weir adds.

Announcements specifying prices and mortgage terms, and detailing the schedule of capital improvements, will be made later in the year, once the capital improvement programs are underway.

In the MeadowWood at Gateway transaction, The Lightstone Group was represented by Granite Partners, and Taconic and Apollo were assisted with acquisition financing by Evan Pariser of Holliday Fenoglio Fowler.

About Taconic Investment Partners

Founded in 1997, Taconic Investment Partners is a fully-integrated real estate investment company that acquires and develops office and multifamily properties. Taconic has acquired and redeveloped more than nine million square feet of property in New York, Chicago, Washington, D.C. and Atlanta.

About Apollo Real Estate Advisors, L.P.

Apollo Real Estate Advisors is one of the most prominent opportunistic real estate investors in the U.S. and internationally. Apollo specializes in acquiring undermanaged and distressed properties and developing properties in major urban areas throughout the U.S. and Europe. Since the firm's founding in 1993, Apollo has overseen the investment of eight real estate funds totaling more than $5 billion in equity. The firm's Web site is www.apollorealestate.com.

About The Housing Partnership

The Housing Partnership's mission is to create affordable homes and revitalize neighborhoods through community development promoted by a dynamic partnership involving the public and private sectors. Established in 1982 by David Rockefeller and the Partnership for New York City, The Housing Partnership has developed more than 18,500 new affordable units and completed 8,000 renovations of rental apartments. The Housing Partnership has leveraged more than $2 billion in private sector financing in over 50 neighborhoods.

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