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As Upper Manhattan Buildings Go into Foreclosure, Officials Try to Influence Sale

Monday, October 22, 2012

City council members and housing officials joined tenants and their advocates Monday outside an apartment building on 190th Street to protest the asking price for the foreclosed property. They claim the sale price is too high and will only result in another round of defaults.

The apartment building is one of 10 currently being sold for more than $50 million by Lone Star Funds and consists of 475 apartments. Vantage, the previous owner that fell into foreclosure, paid $44 million for the buildings. Vantage is an investment group that bought up thousands of apartments during the peak of the housing boom.

“They threw the New York real estate market off its axis," said Benjamin Dulchin, with the Association for Neighborhood Housing and Development.

Dulchin said Vantage was one of the first to pay exorbitant prices for buildings believing they could push out low income tenants and replace them with higher paying ones. In 2010, the company agreed to pay $1 million to settle claims of harassment against tenants. Vantage released a statement saying it was no longer affiliated with the properties in any way.

Lone Star bought the debt on the buildings once Vantage went into foreclosure. A woman answering the phone at the Manhattan office of Lone Star Funds refused to give her name and said the company does not talk to the press. A company website says Lone Star invests globally in distressed assets.

City Council Speaker Christine Quinn said while the city does not have official leverage in private real estate deals, it can still influence the sale. "What we have seen is that when the city gets involved and the perspective owners know that their purchase is going to be under a microscope, they back off," Quinn explained. She pointed to 10 dilapidated buildings in the Bronx that were ultimately sold last year to what she described as a responsible owner.

The city's Department of Housing Preservation and Development said the buildings in question are in better condition than the Bronx properties but are still considered vulnerable and would be closely watched. 

"We want to make sure that to the extent that these buildings are sold that they're sold to responsible owners and that they're sold at prices that will be responsible prices," HPD Commissioner Matthew Wambua said.

The tenants of the building also had some words to share with potential buyers; draped across the fire escape at the 190th Street building was a sheet with the words "Speculators Beware."

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