Riverton Houses valued below mortgage

By Adam Pincus | February 17, 2009 12:24PM

In an ominous sign for owners of overpriced New York City real estate, Laurence Gluck’s troubled Riverton Houses has been appraised at a price 15 percent lower than its first mortgage for a foreclosure sale scheduled for Friday, according to financial analyst firm Trepp.

The servicer of the $225 million loan on the sprawling, rent-stabilized Harlem apartment complex reduced the appraised value of the loan to $196 million, $29 million less than the first mortgage, Trepp said.

The $196 million value is higher than published reports that priced it between $150 and $180 million, but far lower than the $260 million appraised value when the loan was securitized in 2007. German American Capital, a subsidiary of Deutsche Bank, issued the loan.

Gluck’s Stellar Management and partner Rockpoint Group bought the complex in 2005, and refinanced the project with the $225 million loan in 2007 with the expectation that about half the units would be at market rates by 2011. However, by July 2008, only 10 percent of the units had been converted to market rates.

Eric Anton, executive managing director for real estate investment analysts Eastern Consolidated, said the sale, if it occurs, would be a bellweather for the market. Often, such sales are postponed or cancelled after the lender and borrower work out an alternate payment plan, he said.

“The real story is does it get worked out, and if the sale happens what is the price on the sale,” he said.