The Real Deal New York

SG2 mulls sale of Bronx rent-stabilized housing

June 12, 2008 04:28PM
By Adam Pincus

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The private equity-backed partnership SG2 Properties is considering selling several of its multi-family buildings in the Bronx.

“We are marketing a portion of our Bronx portfolio,” SG2 partner Stephen Siegel wrote in an email. “If we get what we think the properties are worth we will sell them.”

He would not confirm the number of buildings being offered, but several sources said that more than two dozen buildings with less than 2,000 apartments and about 50 stores could be sold.

The buildings include 1212 Grand Concourse and 2055 Anthony Avenue.

Many of the buildings were part of a $300 million, 51-building purchase by SG2 and partner BlackRock Realty Advisors in February 2007 from Bronx landlord Jacob Selechnik, sources said.

The city has seen billions of dollars invested by private equity companies in multi-family, rent-regulated apartments in recent years, mostly in northern Manhattan and the outer boroughs.

Critics say that as sales prices rise, buildings will become unaffordable for renters or the owners will not be able to maintain them.

SG2 has purchased some 5,000 units in more than 70 buildings in the Bronx, according to media reports.

At the time of the 2007 buy, Siegel, who is also chairman of global brokerage at CB Richard Ellis, said the mostly rent-stabilized apartments would remain affordable.

“They are stabilized and increases are defined,” he wrote in an email Thursday.

Selechnik, who still owns property in the borough, said he was not aware of the sale, but added it was a difficult time for landlords who are seeing expenses rise.

“It is much harder now,” he said. “Fuel costs twice as much.”

Dina Levy, director of organizing and policy at the Urban Homesteading Assistance Board, a tenants advocacy group, said private equity-backed firms are paying too much for buildings.

“It is our contention … that they can only make their return by reselling at a higher price,” she said. “Our fear is that if this pattern continues the building will be so over-leveraged, that it will have so little equity left that the building will crash.”

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