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NYC: 1,700 Apartment Portfolio Being Sold

05/27/2015

As part of one of the largest proceedings for foreclosures in New York City within the past several years is a portfolio of approximately 1,700 apartments. As reported by The Real Deal, owners of what is known as Three Borough Pool sold seven buildings for roughly $58 million. According to public records, the buildings that consist of over 500 apartments were purchased by Black Spruce Management.

The rest of the 42 buildings associated with Three Borough Pool are under contract to be sold by Westbrook Partners and Normandy Real Estate Partners. These buildings include the seven purchased by Black Spruce, with five being in the Bronx and two in Brooklyn. Regarding contracts for the remaining buildings, no information has been released.

Tenants Fighting for Repairs

Immediately after the sale to Black Spruce, tenant advocates were concerned that commitments to make necessary repairs to the buildings by Westbrook and Normandy have not been lived up to. The advocates are still extremely worried that the properties will be sold for a significant price, renovated, and rents raised, giving the new owners reason to push existing tenants out.

In a statement from Black Spruce, further improvements will be made. As stated by Joshua Gotlib, the company’s co-founder, the plan is to work on the large number of open violations in order to make tenants happy. He added that that has always been the company’s plan.

At one time, the portfolio was considered one of the most high-profile examples of apartments being purchased during the boom by investors who wanted to renovate, buy out tenants, and then raise rents. However, after being hit by the recession coupled with a number of other factors, the owners were unable to pay the $133 million loan back in 2012.

Very quickly, the buildings in the portfolio began to fall into disrepair, leaving the tenants with a long list of problems to include vermin, improper working security doors, leaks, and more. In fact, there was a time when the buildings received some 3,400 code violations. To better understand repairs needing to be done, both Westbrook and Normandy sent out a tenants’ survey, which unveiled an additional 1,650 requests for repairs.

Loan Refinancing

At the beginning of 2014, the $133 million loan was refinanced by Westbrook and Normandy. In addition, the companies came to an agreement with New York’s Attorney General, Eric Schneiderman, to deal with the increasing number of repairs. A new management company was brought on board, which immediately began to work on the violations. Confirmed by Westbrook and Normandy, roughly 95 percent of the property’s violations haven been taken care of, along with approximately 5,000 repairs during an eight-month period.

A company spokesperson stated that quickly after the owners were made aware of issues, steps were taken to remedy all of the problems. As part of the deal with the Attorney General, Westbrook and Normandy also agreed to create a $400,000 fund for resolving other violations once the portfolio sale is complete.

A spokeswoman with the Attorney General’s office said that from now on, the office is 100 percent committed to protecting the tenant’s rights. As such, management of the buildings will be closely monitored. While tremendous progress has been made, as of last month there were still over 2,100 violations throughout the 30 buildings.

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