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Embedded in a plastic memento in Henry Benach's office are three checks totaling $59 million that represent the end of an eight-year nightmare for his company, Starrett Housing Corp.
The nightmare began in 1979, when the Iranian government seized a $200 million housing project that Starrett had been developing for the deposed Shah. That put the company into a tailspin it did not pull out of until late 1987, when the Iran-U.S. Claims Tribunal ordered that Starrett be paid the $59 million from Iranian assets the United States had seized.
"Now that we're unshackled, Starrett development is back in business," says Mr. Benach, Starrett's 71-year-old chairman and chief executive.
But getting back into business will be difficult. Government subsidies that made possible developments like Starrett City, a 5,881-unit Brooklyn project completed in 1974, are no longer available.
Emerging in a sort market
Moreover Starrett, which also operates a construction management subsidiary, is emerging from the Iranian debacle at a time when the area's construction industry is contracting. The luxury residential and office-space markets in Manhattan are glutted right now because of city tax incentives that expired in recent years. And the financial services industry, which powered the real estate market through the 1980s, is still staggering from the stock market crash, which occurred 10 days before the company received the three checks.
Perhaps that's one reason why, since the Iranian settlement, most of Starrett's attention has focused on repairing the financial damage done to it by the expropriation. The company has raised cash, reduced debt and recapitalized, while senior management and other insiders have increased their stake. That's led to speculation that Starrett is readying a leveraged buyout.