Major residential landlord Vantage Properties is turning over most of its ownership position in nearly 80 heavily rent-regulated apartment buildings in Queens to joint venture partner Area Property Partners, sources familiar with the deal said.
Area Property, led by chairman William Mack, will take control of the apartment buildings from Vantage, headed by CEO Neil Rubler, by the end of December, and transfer management to two well-known firms, the sources said. However Vantage would retain some ownership stake, but it was not clear what it would be, another source said.
Vantage partnered with Area Property in October 2006 to buy a Queens portfolio formerly owned by investor Nathan Katz, with 2,124 units in 34 buildings for $266 million; and in 2008 they again partnered to buy the 44-building Nicholas Haros Queens portfolio with 1,969 units for $274 million, city property records show.
Bronstein Properties will manage the former Katz portfolio, including properties such as 43-09 47th Avenue in Sunnyside, and Cooper Square will manage the former Haros portfolio with properties including 102-43 Corona Avenue in Corona, another source familiar with the situation said.
News of the handoff leaked out as Vantage laid off several employees, and some tenants seeking repairs were told to call back in December after a turnover took place. In another building, the superintendent talked of a sale, while worrying whether he would keep his job, one tenant, who asked to remain anonymous, said.
Vantage, which bought about 10,000 apartment units since being formed in 2006, has struggled with some other properties in Manhattan, even as it buys new ones in New Jersey and plans to pick up others down the East Coast. The pattern is similar to other real estate firms struggling to come back as they shed overleveraged assets acquired in the boom years.
“Area [Property] has been an excellent partner in reviving these classic Queens rental properties. They had the foresight to see the inherent value in these buildings and the acumen to make an attractive, long-term investment,” a spokesperson for Vantage said in a statement. Area Property, Cooper Square and Bronstein, did not respond to requests for comment.
Vantage and Area Property made the acquisitions with the intent of raising rents dramatically, loan documents show, but were not able to increase them as quickly as projected.
In response to allegations by residents and housing advocates of overly aggressive tactics to remove tenants, in January 2010 then-Attorney General Andrew Cuomo announced he would sue Vantage. Instead of filing suit, the next month, Cuomo’s office struck a settlement with Vantage. While not admitting guilt, Rubler agreed the firm would pay $1 million and maintain oversight and guidelines on how it operated its rental practices.
It is not clear what portion of that agreement remains in effect with Vantage out as manager, but apparently it is retaining some type of ownership interest, sources said.
A spokesperson for the AG declined to comment.
Tenant advocate Robert McCreanor, director of legal services for the Catholic Migration Office of the Roman Catholic Diocese of Brooklyn and Queens, who has worked with tenants in the buildings for years and sued Vantage in 2008 alleging harassment, said the three years of oversight ordered by the AG should remain in place.
“It seems pretty clear as long as [Area] is the owner or has an ownership stake it would be unfair and unjust for them to be able to circumvent the [settlement agreement],” he said.
This is not the first building loss for Vantage. In June, investment firm Harbor Group International took control of a distressed, 214-unit portfolio in Hamilton Heights from Vantage and Area Property.
Vantage announced it is buying properties even as it unloads older ones. In July, Vantage said it and equity partner Angelo, Gordon & Co. had paid $242 million to buy six multi-family properties in New Jersey.