The Real Deal New York

Blackstone ordered to run tenant communications by judge after “misleading” eviction notices: court docs

Company allegedly continued questionable practices at the center of J-51 lawsuit filed against Jack Parker Corp. last year
By Eddie Small | March 06, 2019 06:38PM

From left: Blackstone’s Jonathan Gray, Kathleen McCarthy, and Kenneth Caplan with the Parker Towers at 104-20 Queens Boulevard in Queens

The Blackstone Group allegedly moved to evict two tenants from Parker Towers, a Queens residential complex subject to an ongoing lawsuit over illegal rent increases.

The private equity firm and world’s largest real estate manager will now have to screen all its future tenant communications with a state court as a result of what the tenants’ attorneys called “incorrect and deliberately misleading” eviction notices, and rent renewals that failed to mention the lawsuit could lower tenants’ rent and even win them a settlement.

Judge W. Franc Perry III signed the injunction on Wednesday, the latest procedural development in a lawsuit filed by tenants in March 2018 against the Jack Parker Corporation, which was accused of illegally deregulating apartments in the Queens apartment complex. Jack Parker sold the towers to Blackstone for $500 million in November, and Blackstone was named as a defendant after the deal closed.

“It shouldn’t require an injunction to get the largest real estate manager in the world to play by the rules,” said Aaron Carr, whose nonprofit group Housing Rights Initiative performed the initial research that led to the lawsuit.

Blackstone declined to comment.

The lawsuit claimed that the 1,327-unit rental complex in Forest Hills received tax breaks under the J-51 program, which requires that landlords keep their apartments rent stabilized. Despite this, Jack Parker still leased out apartments at market rate rents, failed to register apartments as rent stabilized with the state, and never provided tenants with rent-stabilized leases, the lawsuit alleges.

The injunction request filed Tuesday focuses on eviction notices Blackstone allegedly sent to tenants Maria Davila and Chris Haley in late February 2019 telling them that their apartments were not rent stabilized. It also notes that multiple other tenants recently received their lease renewals with a note from Blackstone that said it was “currently evaluating” how the class-action-seeking lawsuit could impact the building. This notice did not tell the tenants what their rights were under the lawsuit and did not say that the suit sought to reduce rents at the building, according to the court documents filed by a tenant attorney.

Newman Ferrara LLP, the law firm representing the tenants, described Blackstone’s eviction notices as “patently false” and said it is “fundamentally unfair” to ask tenants to make decisions about whether to move or renew their leases without letting them know that they could see sharp decreases in rent depending on how an ongoing court case is resolved.

“Indeed, once a tenant vacates, the right to a rent-stabilized lease vanishes,” Newman Ferrara said on the injunction request.

The injunction has put at least a temporary stop to the evictions of Davila and Haley, and it requires Blackstone to receive court approval for any further communications it has with Parker Towers tenants who are involved with the lawsuit.

Davila and Haley are not part of the larger lawsuit, according to a source familiar with the proceedings.

In the original lawsuit filed in March 2018, Newman Ferrara said only 642 of the 1,327 units were listed as rent-stabilized, when J-51 rules require all units to be stabilized.

Blackstone made one of the largest real estate deals in New York history when it purchased Stuyvesant Town and Peter Cooper Village with Canadian pension fund Ivanhoé Cambridge in 2015 for $5.3 billion. The companies pledged to keep 5,000 apartments in the complex affordable for 20 years, and the city pledged to provide them $220 million of financial aid.