CIM Commercial Trust Corporation Statement
In May 2011, CIM purchased a loan on 47 E. 34th Street, a multi-family residential building developed under the 421-a program, which offers tax benefits for housing developments. At the time, a master lease for the residential portion of building was already in place with BridgeStreet Corporate Housing, a corporate-housing provider. In late 2011, CIM took control of the property through foreclosure and negotiated a new lease with BridgeStreet in early 2012, with provisions that CIM believed would allow the building to be operated in compliance with the terms of the 421-a program. In 2014 CIM was alerted by the New York Attorney General (“NYAG”) that the building’s current use might not be compliant with the 421-a program. CIM engaged with the NYAG’s office and commenced an in-depth analysis of the issues the NYAG’s office brought to our attention. Although there were a number of complex issues involved, we concluded that the NYAG’s position was the more correct view of 421-a program, and CIM concluded it was not entitled to the 421-a benefits it had received since it took ownership of the properties. Once CIM reached this determination we moved to quickly rectify the situation by agreeing to a settlement, which included (i) an agreement to terminate the lease with BridgeStreet, effective March 11, 2015, (ii) repayment of the benefits we had previously received, and (iii) making a payment to reimburse expenses the NYAG’s office incurred through this process. We appreciate the hard work of the NYAG’s office on this matter and we are pleased that with this resolution the building can continue as a participant of the 421-a program. Effective March 11, 2015, CIM will be directly operating and managing the property and leasing the units as rent-stabilized apartments, thus adding more affordable housing in Manhattan.
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