Emerald Equities Auction Shows City’s Limitations

12 minutes read

A lender to 38 distressed, rent-stabilized buildings appears willing to take them for itself, rather than sell to a Mamdani-approved buyer.

One-third of the Emerald Equities portfolio of rent-stabilized buildings was put up for auction at a New York courthouse Tuesday. All but one building returned to the lender in a credit bid.

The result is a setback for the Mamdani administration, which has been looking to use its influence and coffers to get distressed and neglected buildings into the hands of preferred buyers.

The administration had backed a bid from Spatial Equities Co to take over the properties after a series of foreclosure suits. But in the past few months, negotiations with the lender stalled, Gothamist reported Tuesday.

As the city moves forward with a law to give nonprofits the first bid in some sales, the recent auction illustrates the limits of these plans: the city can help fund and finance bids from its preferred buyers, but it largely can’t force a seller into a deal. Spatial Equities’ final offer totaled $110 million for the properties, according to Gothamist, more than $129,000 per unit.

What the lender is planning for the buildings it will now own is unclear. State law makes it difficult for private landlords to raise the rents in rent-stabilized apartments, and the units are subject to a rent freeze.

Sabal Capital originated an $189 million refinancing loan on the properties in 2019, sponsored by Emerald Equity Group and Isaac Kasirer. More than half of the units were planned to be renovated. But just a few months later, the city closed avenues for landlords to increase the rents in stabilized apartments.

Now, in some rent-stabilized buildings across the city, rent revenues are not enough to support the cost of building operations. In May, Cea Weaver, director of the Mayor’s Office to Protect Tenants, told The Real Deal that was not the case with this portfolio.

“The buildings cash flow. What they need is rehab,” Weaver said at the time. “There’s a stable future here.”

Tenant advocates had been running a “buyer beware” campaign, hoping to keep potential buyers that were not Spatial Equities away. Now that a portion of the buildings is back with the lender and no longer under receivership, the door is open for tenants to sue for repairs.

“We’re going to sue as many of these people as possible on day one to make sure tenants get the repairs they need to keep themselves and their families safe,” said Legal Services NYC attorney Matthew Latterner, who has been representing tenants.

Another subset of the portfolio will be auctioned on Nov. 17.

“If Sabal takes control of these buildings, they’re going to become one of the largest slumlords in New York City,” Latterner said. “And they’re going to learn pretty quickly that slumlords in New York City get sued — a lot.”

What we’re thinking about: What’s the Mamdani administration’s next portfolio to focus on? Send tips to lilah.burke@therealdeal.com

A thing we’ve learned: Sesame Street, the children’s show set on a fictional block in Manhattan, debuted on this day, Nov. 10, in 1969.

Elsewhere…

— Albany’s “blue wave” will complicate efforts to redraw New York’s district map, Politico reports. Redistricting in Republican-dominated states did not protect the GOP from losses, and has led leaders in both parties to rethink their approach.

— More than one-third of transfers of one- to three-family homes from individual owners to companies in New York City last year had gaps in their ownership records that could suggest deed theft, Realtor.com reports, citing a recent report from New York University’s Furman Center.

— Construction on a facelift for Manhattan’s Canal Street will be delayed until 2027, the Department of Transportation told a local community board, Gothamist reports.

Closing time

Residential: The most expensive residential sale recorded Tuesday was $24.3 million for a 1,778-square-foot condominium at the Waldorf Astoria, 301 Park Avenue.

Commercial: The most expensive commercial transaction recorded was $41 million for a 15,800-square-foot former movie theater at 1001-1007 Third Avenue in Lenox Hill. The Real Deal covered when Reading International listed the property in April.

New to the Market: The highest price for a residential property hitting the market is $15.9 million for a 5,260-square-foot condominium at 95 Madison Street in NoMad. The Vicki Zhi Saali Team at Global Real Estate Ventures Group has the listing.

— Matthew Elo