A mystery real estate investor who wants to buy 10 woefully distressed
Bronx apartment buildings will be stepping into a world of hurt if he
doesn't do right by tenants, City Council Speaker Christine Quinn said
Tenants, housing activists and the Council's Taskforce on
Financially Distressed Rental Housing oppose the imminent sale of the
rent-stabilized buildings formerly owned by private equity firm Milbank
Real Estate. They fear the buildings, which are in foreclosure and have
a combined 4,500 code violations—including mold, bedbug infestation,
sagging ceilings, broken windows and major plumbing problems—will only
get worse under a new owner who is unable or unwilling to make the
buildings livable again.
"LNR, you should not make this sale," Quinn said, addressing the
financial company that controls ownership of the buildings at a press
conference and rally outside 2505 Aqueduct Avenue, one of the 10
properties. "And to whoever this individual is who is buying these
buildings, understand this: When you buy these buildings, you buy a
whole lot of headache from the City of New York. You buy it, you own it
and we will hold you responsible for every single violation."
Properties, a financial company acting as special servicer on behalf of
Wells Fargo, which holds the mortgage on the buildings, is in
negotiations with potential buyers, a source close to the company said.
LNR declined to comment on the sale and would not reveal the identity
of the potential buyer. The source said LNR is sensitive to the rotten
conditions tenants have been living with and has vetted the potential
buyer to make sure it is up to the task of improving the buildings. The
company believes a transfer of ownership is in the best interests of
tenants as well as the firm and bank, the source said.
Rafael Cestero, commissioner of the city's department of Housing Preservation and Development, which has been trying to formulate a response
to the growing problem of foreclosures in over-leveraged apartment
buildings, said the city has no authority to stop a private sale.
don't know who is buying it. Let's see who they are. Let's reserve
judgment and then let's see if we can work with them," he said Monday
night when asked about opposition to the impending sale.
Real Estate, a private equity group that owns high-end commercial real
estate in Southern California bought the ten buildings—holding a
combined 548 apartments—in 2007 for $35 million. Tenants say conditions
quickly deteriorated. Milbank failed to make mortgage payments and in
March 2009 Wells Fargo began foreclosure proceedings.
Arthur Local Development Corporation, a Bronx non-profit housing
provider, was appointed receiver to collect rent and manage day to day
repairs. Belmont executive director Joseph Cicciu said his group has
hustled to keep up with maintenance but that the buildings are in such
bad condition now that the cost of repairing them far outstrips what
the rent roll provides.
"There are still millions of dollars of
repairs needed. I hope to god whoever this buyer is will be able to
turn these buildings around," he said.
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