Predatory investors put housing at risk: report

December 07, 2009 06:28PM

New York City’s affordable housing crisis can be linked to a pandemic of predatory equity investors in the region, according to a recent report (see full report below) compiled by the Association for Neighborhood and Housing Development, a non-profit advocacy organization. These investors have snatched up around 100,000 units of affordable or rent-regulated housing in the past four years, a figure that represents around 10 percent of the affordable or rent-regulated housing in the city, bringing with them pressure to turn over profits on the buildings — sometimes by as much as a 14 to 20 percent annual rate of return, the report says. Additionally, the report found that many of these equity loans earn just 55 cents on each dollar of debt, a level which is considered predatory, Crain’s reported. Much like Tishman Speyer, the developer at Stuyvesant Town that recently lost a landmark deregulation case, these private investors often try illegal deregulation tactics, and sometimes even intimidation, to drive out tenants. “Neighborhoods around New York City have seen a dramatic rise in the harassment of tenants as landlords tried to illegally remove low- and moderate-income families so they could raise the rent,” the report says. “This increase in harassment stemmed in large part from the rise of a new type of buyer of New York City real estate.” The report named 11 neighborhoods in the city, including the Lower East Side, North-Central Bronx and Washington Heights, as particular breeding grounds for predatory equity deals on affordable housing. TRD

Predatory Equity-Evolution of a Crisis Report