- Posted at 7:04, November 14, 2013
- By Russ Bleemer
Don’t get involved if you can’t keep up with the costs.
That seems to be the lesson for some heavy hitters after they joined the groups of investors in recent years who have bought into below market rent apartments, only to see their upsides disappear in a cloud of debt and repair bills before the apartments could be redeveloped and released at market pricing.
The Wall Street Journal reports that a portfolio of about 1,700 such apartments known as the Three Borough Pool is in foreclosure proceedings.
The pool covers more than 40 northern Manhattan, Brooklyn and Bronx buildings, filled with below market tenants and complaints about addressing repairs and security, according to the article.
The paper says that big name investors bought into the complex at the height. They are The owners include high-profile buyers of apartment complexes during the boom years: Normandy Real Estate, Westbrook Partners, Vantage Investors and David Kramer.
A federal court suit by the servicer of a $133 million loan says that the group failed to pay about 18 months ago. The newspaper reports that the owners expect to settle the foreclosure case this week and are working on a refinancing.
It also says that the economic downturn hit the buildings hard, forcing about 300 evictions across the parties when rent subsidies failed.
And management failed to keep them up. The article described a visit to a Bronx building, in the Claremont section, with multiple security and management issues, noting that the building currently has 135 housing code violations on record.
Kramer, who is the manager, detailed step in the court papers and in the article that the pool has taken to keep up with the problems across the buildings; a tenant organizer quoted in the article concedes the difficulty of keeping up with spread-out properties.
The Wall Street Journal article can be found here.