Isaac Kassirer, the prolific multifamily investor who went on a tear acquiring thousands of rent-regulated properties throughout Manhattan and the Bronx before the rent law changed, is on the verge of losing a big chunk of his portfolio.
The debtors of more than a dozen buildings owned by Kassirer’s Emerald Equity Group, located on or around West 107th Street and East 117th Street in Harlem, filed for Chapter 11 bankruptcy, PincusCo reported. The petition asks for the properties to be transferred to the lender, LoanCore, which provided Emerald Equity Group with roughly $185 million in financing for the properties at the beginning of 2019. The firm had defaulted on the loan, which now totals about $203 million with interest.
Emerald Equity also sought financing around the same time from Freddie Mac, which provided a $189 million loan, the largest deal at the time from the lender’s Small Balance Loan program.
Emerald Equity bought the 1,181-unit rent-stabilized portfolio for $357.5 million in late 2016, with a plan to renovate rent-stabilized apartments and convert them to market rate. By the end of 2017, some 251 units in the East Harlem portfolio had been moved to market rate, according to tax bills and public data.
Under the law, the recoverable cost of renovations became limited to $15,000 — or $83 per month — over a period of 15 years. Landlords are no longer allowed to raise the rent 20 percent when a tenant leaves, and a unit can no longer be removed from regulation based on the rent exceeding a certain threshold.
Since then, the company has been trying to figure out how to salvage its investment. In January, Kassirer said the company was exploring “all options.” The coronavirus pandemic gave the firm a slight reprieve, as some of its loans went into forbearance in the spring. But after the pandemic hit, some renters of apartments in the portfolio went on a rent strike.
Another Emerald Equities lender, Ladder Capital, recently moved to foreclose on a $32 million loan it provided for four Harlem rental properties, which Kassirer’s firm defaulted on.
[PincusCo] — Keith Larsen