Mayor Zohran Mamdani and top city officials hope to influence the sale of several dozen rent-stabilized apartment buildings in East Harlem facing foreclosure after his administration failed to slow a similar high-profile transaction in January.
Helping tenants gain more control over their housing was one of Mamdani's key campaign pledges, and he acted fast to try to make good on the promise.
On his very first day in office, Mamdani announced that city lawyers would file an 11th-hour bid to stall the looming bankruptcy sale of about 5,000 mostly rent-stabilized apartments owned by the firm Pinnacle across three boroughs. The goal was to steer the portfolio away from another large property owner with a track record of poor management and toward purchasers favored by a citywide union of tenants.
The last-ditch play did not work out. A judge allowed the sale of the apartments to proceed and the new buyer, an overseas firm called Summit Properties, officially closed on the properties last month.
Now, as Mamdani approaches his 100th day in office, his administration is eyeing the upcoming sale of another long-troubled set of rent-stabilized apartments — this time roughly 850 units across 38 dilapidated buildings in Northern Manhattan that were previously owned by the real estate investor Emerald Equity Group.
Cea Weaver, director of the Mayor’s Office to Protect Tenants, said the city’s housing agency is still figuring out how best to intervene in the sale, or what entities may be best equipped to purchase the portfolio — including a local nonprofit with a plan to buy a collection of adjoining properties. But she said the city intends to take action.
“These tenants who live in this building have been on a roller-coaster from one speculative investor to another,” Weaver said. “The city is really interested in breaking that cycle of divestment and illegal overcharging, and finally stabilizing these homes.”
The buildings will soon be headed to the foreclosure auction block after changing hands multiple times over the past two decades. Emerald, the most recent owner, took on hefty loans to acquire the buildings in 2016 and began raising rents to increase profits and pay off debts before those tactics were rendered illegal by a slate of reforms signed by then-Gov. Andrew Cuomo in 2019. Emerald eventually walked away from the properties, leaving behind a growing number of hazards.
The 38 buildings had a combined 2,342 housing code violations as of April 3, according to a Gothamist review of city data.
East Harlem tenant Maricela Reyes said she has lived in her first-floor apartment for 41 years and has contended with collapsed ceilings and chronic leaks.
Last December, tenants in five of the buildings along the south side of East 103rd Street won a legal settlement in which the landlord agreed to give them $500,000 in rent credits and make repairs to the crumbling apartments. The victory came after years of tenant organizing with help from the organization Community Voices Heard. Those tenants say they now want the organization East Harlem/El Barrio Community Land Trust to buy the buildings.
The future of the East Harlem properties marks another early test of Mamdani’s desire to steer troubled rent-stabilized apartments into the hands of owners that his administration considers more responsible, including, potentially, the city itself.
The administration’s actions could emerge as a template for future deals — as well as a new lightning rod for a real estate industry staunchly opposed to more government intervention, and the regulations they blame for the foreclosures and financial distress across at least 1,600 buildings in the city, according to recent data from the Rent Guidelines Board.
Weaver said the East Harlem buildings were the “poster child” for the kind of pre-2019 purchases that prioritized profits over protecting existing residents. Emerald bought the buildings for more than $350 million in 2016 before taking out another $180 million loan in December 2018, loading them with debt months before new laws upended their strategy of increasing rents and lifting units out of rent-stabilization.
Emerald then defaulted on those loans. Its lender, a trust managed by a variety of banks, foreclosed on the properties in 2024 and a judge ordered a sale earlier this year.
The trust must decide on who will buy the properties. Its attorneys did not respond to multiple requests for comment.
Plummeting value for landlords, mounting problems for renters
If recent history is an indication, the 38 buildings in East Harlem would fetch a fraction of their purchase price — especially given their sorry state.
In February, Emerald sold four of its properties in the Bronx for $10.7 million after purchasing them in 2017 for over four times that amount, Crain’s reported. Another 29-unit Emerald building on East 106th Street sold for less than $300,000 last year — down from $9 million in 2016, according to The Real Deal.
Late last month, Weaver and Mamdani visited the five buildings on East 103rd Street to observe the dangerous structural problems and quality-of-life issues that tenants contend with — like a single boiler servicing three buildings and a collapsed retaining wall that held up a steep hill, prompting the Department of Buildings to issue a partial vacate order.
When Gothamist visited the 116-year-old properties a few days later, tenants pointed out the places where they said their ceilings had repeatedly collapsed and where floors destroyed by water leaks allowed rats to crawl into apartments from the basement.
“Every time we took a step, it was like, ‘Oh, there's another hole there,” said William Rivera, a first-floor tenant whose rotted kitchen floor is now covered with plywood.
Rivera, 45, said he has a federal Section 8 rental assistance voucher that helped cover the rent, which he said was about $2,000 a month, until the program ceased making payments after inspectors assessing the condition of the apartment.
Rents in the East Harlem buildings typically range from about $1,200 to more than $3,200 a month, according to 2024 rent rolls submitted in the foreclosure cases.
Last year, New York Attorney General Letitia James's office found that Emerald had unlawfully deregulated rent-stabilized apartments and overcharged tenants, forcing the company to reverse rent increases. Current tenants in the East Harlem buildings have complained of similar overcharges. A spokesperson for James declined to comment on any current reviews.
East Harlem/El Barrio Community Land Trust Manager Brian Peters said his organization has worked with engineers and consultants who determined that the cost of purchasing and renovating the five buildings on East 103rd Street would total between $35 million and $50 million.
Peters and other land trust members say they want to buy the buildings, and tenants involved with the group met with Mamdani during his visit last month. Peters said the organization would likely require significant public investment, including low-interest loans from the city’s housing agency and property tax breaks through the city’s Article XI program, along with private financing.
He said the land trust does not have the capacity to purchase and repair the remaining 33 buildings, comparing the large number of apartments in the portfolio to the size of a “small town.”
Mamdani inside a building in East Harlem. His administration is trying to steer a foreclosure sale towards a nonprofit buyer or other entity that the city believes will serve as a better steward of tenants' homes.
The buildings’ physical and financial problems trace back nearly two decades.
The British investment firm Dawnay Day Group bought the buildings in 2007 for $225 million with a plan to replicate a common strategy that state housing laws allowed: Drive out low-income tenants, raise rents and potentially lift units out of the stabilization system, the New York Times reported at the time.
But less than two years later, the company went bankrupt.
Two other companies, Fairstead Capital and E+M Associates, then acquired the buildings and sold them in 2016 to Emerald Equities for nearly $360 million.
Emerald, led by its CEO Isaac Kassirer, engaged in similar strategies for driving out tenants, renovating apartments, increasing rents and shifting at least some of the units out of the stabilization system, the company wrote in later bankruptcy filings. Kassirer did not respond to calls and texts seeking comment.
Emerald took out a new $189 million loan for the 38 buildings in late 2018, property records show. The timing of the deals proved disastrous for the company. Just six months later, New York state lawmakers approved sweeping new measures that torpedoed the methods that owners could use to increase rents on stabilized apartments, leaving Emerald with huge loan obligations that depended on higher revenue than the company could generate.
The scale of distress in rent-stabilized housing is more than 100 times larger than this portfolio.
Emerald defaulted and in 2023, one of its lenders, Mack Real Estate, tried to salvage its investment by managing the buildings. Mack spokesperson Eric Waters told Gothamist the company soon found the problems were too big, the expenses too high and the rent revenue too low and walked away after losing $25 million.
“Mack stepped in after a default and invested significant time and capital to try to stabilize these properties,” Waters said in a written statement.. “While we weren’t able to make the economics work, we hope the next owners can move them forward in a way that benefits the community.”
Day-to-day management is now overseen by court-appointed receiver Richard Madison and his company Colliers, neither of whom responded to numerous requests for comment.
Bracing for a ‘tsunami’ of foreclosures?
For real estate professionals and landlord groups, the problems at the Emerald buildings, while extreme, are a symptom of systemic problems they say have devastated the industry: namely the laws that limit owners’ ability to increase rents in stabilized apartments.
Kenny Burgos, head of the lobbying group New York Apartment Association, which represents owners of rent-stabilized housing, has called the argument that speculators took on too much debt prior to 2019 a “talking point” from advocates that obscures financial problems that also affect long-time landlords who did not overleverage to buy buildings.
A new report from the city’s Rent Guidelines Board paints a mixed financial picture for owners of rent-stabilized housing. While overall, landlords’ net operating incomes rose by more than 6% in 2024, owners of 100% rent-stabilized apartment buildings, especially in the Bronx and Northern Manhattan, fared worse. In about 9% of buildings, expenses outpaced income.
“The scale of distress in rent-stabilized housing is more than 100 times larger than this portfolio,” Burgos said. “If the administration's plan is to just intervene in every failing building or portfolio, then they won't be doing anything else for the next four years.”
Plywood covers the rotted floor in William Rivera's first-floor apartment in East Harlem.
Seth Glasser, a broker with the firm Marcus & Millichap and a real estate podcast host, warned of an “overwhelming tsunami” of foreclosures on the horizon.
He said tenant protection advocates, like Mamdani and Weaver, are now “trying to solve a problem that they created.”
“They’re making it undesirable to own the buildings,” he said. “Who is going to own buildings where they don’t want you to make money, the costs go up every day and you’re not allowed to raise the rent?”
But for Weaver and other tenant advocates, the current economic landscape is resetting the market for buildings with rent-stabilized apartments.
Buyers, she said, should expect steady income based on current rents, rather than the larger profits that they may have enjoyed under the pre-2019 business model.
“ Your rent-stabilized apartment building in New York City is a lot more like a savings bond or an IRA than it is like a private equity-style return,” Weaver said.
And to tenants, the notion that a new owner, with help from the city, may be able to renovate their homes without trying to push them out is cause for optimism.
Carlos Rodriguez, 57, said he has stayed in the apartment where he grew up, despite its collapsing ceiling and chronic leaks, because it’s a foothold in the five boroughs and allows him to care for his mother with dementia.
“I love New York,” Rodriguez said. “I love the neighborhood.”
