Sam Suzuki: I’m no slumlord

Managing six distressed apartment buildings in the Bronx did not turn out as former landlord Sam Suzuki expected. There was the day he learned that an Aqueduct racehorse had been hidden in the backyard of one of his buildings by a trainer trying to save it from being euthanized.

There were the pit bulls with sharpened teeth roaming the halls, and a pigeon coop on one building’s roof.

But those weren’t the problems that landed him in jail at the Manhattan Detention Complex, known as the Tombs.

Over much of the past year Suzuki has been pilloried in the press for being a slumlord. He had to battle well-organized tenants mounting a rent strike, and a growing stack of housing code violations.

All the while he had large debt payments to make each month and he had investors that did not want to put in any more money.

After failing to make a series of repairs demanded by a Bronx Housing Court judge on one property in that borough, he was finally ordered to jail on civil contempt charges in June, where he remained for nearly a month, until the management of the property was changed.

Then he got one more surprise. His wife of two and a half years, a former New York 1 reporter now with CNN, Sandra Endo, filed for divorce in New York State Supreme Court June 30. (Endo declined to comment.)

“I am leaving the low-income housing business,” Suzuki told The Real Deal in an exclusive, wide-ranging interview, a day after the Bronx court officially ruled on July 26 that he was no longer responsible for the troubled Bronx building at 1585 East 172nd Street.

Going forward he will concentrate on higher-end rehabilitations and ground-up development in Queens, Manhattan and New Jersey.

“I am a distressed-debt guy,” he said. “When you are buying the debt, [the owners] do not give you a full picture of what you are buying. You are not buying the property. That is the risk you take.”

Opportunity in downturn 

Suzuki is the son of Japanese immigrants, born in Manhattan and raised in Queens, having attended Jamaica High School and Pace University.

He is fit — he is an expert in karate — and well-tailored, looking a bit younger than his 45 years and three marriages. Despite being a long-time real estate investor, he is a renter, living in Flushing. He is the father of three children, ages eight to 14, although none with Endo.
After briefly mentioning his marital history and his children’s ages, he declared, somewhat sheepishly but with a sense of boyish pride, “I am a character.”  He declined to comment on the divorce, other than to say it was amicable.

His professional finance career began in the 1980s at Dime Savings Bank. In 1986 he moved to Citibank, where he learned about distressed assets during the last major downturn, and to this day he views himself as a workout specialist.

In 1994, taking advantage of the depressed market, he joined a two-year-old development firm that became Vintage Group, which at its peak in 2006 had scores of multifamily properties, Suzuki said. He left Vintage in the fall of 2008 to start Hunter Property Management, which he formed to take advantage of the nascent downturn.

The first acquisition he set his sights on was for 22 troubled properties in the Bronx owned and then abandoned by Ocelot Capital Group. He began by taking over management of the properties, but his plan was to buy them for his investors, a group of individuals from Japan.

But almost from the start the problems began.

Suzuki’s plan was to purchase approximately $46 million in debt on the properties for about $30 million, or about 30 percent off, he said.

“We were in contract for all the properties. A deed in lieu. Whatever we bought the note discounted — that was our profit,” he said.

In May 2009 he took title to six of the buildings for $13.5 million, receiving no discount for loans on the troubled properties. His entire anticipated discount, he said, was to come from the purchase of the rest of the buildings in the portfolio.

But then, he said, Fannie Mae blocked the sale of the larger block of the portfolio to Suzuki’s investors, and instead the notes on 14 properties were sold for approximately $5 million to former Mets player Mo Vaughn’s Omni New York, which is expected to take title to them this month.

That move put Suzuki in a panic.

“Of course I freaked out. I was pissed that I didn’t buy the [full portfolio of] buildings” at the sharply discounted rate Omni paid for them, he said.

He dismissed the opinion held by housing advocates and the city that the buildings in the Ocelot portfolio need in some cases millions of dollars each to stabilize them.  He forwarded to The Real Deal professional draft engineering reports on the six properties he bought, including 1585 East 172nd Street, that said they needed at most $200,000 per building in the near term.

But even as he made repairs on his buildings’ clearing violations, new complaints were filed.
Affordable housing advocate Dina Levy, director of organizing and policy at the Urban Homesteading Assistance Board, disputed Suzuki’s claim that he improved the six properties. But her biggest complaint was not about the number of violations, which she said can be manipulated. It was that he did not appear to have a comprehensive plan to rehabilitate the buildings, in contrast to Omni.

“There was no plan in place. From the day we met him to the day he went to jail, he could not produce a plan,” Levy said. “And [the buildings] became more distressed under his ownership.”
Despite landing on the Village Voice list of the city’s 10 worst landlords this year, Suzuki said he is no slumlord.

“No, I am not. I bought the properties that had violations on them. I did not cause the violations. I believe the slumlord causes the violations,” he said.

Path to jail

Just two months after he took title in May 2009, housing advocates, suspicious that he lacked the means to rehabilitate the buildings properly, filed suit to force him to make repairs.

By March this year, many repairs at one particular property, 1585 East 172nd Street, remained uncorrected, and in June, Bronx Housing Court Judge Jerald Klein ordered him as the responsible party to jail.

Suzuki blamed a rent strike that starved him for cash, but he acknowledged that his investors did not pony up additional funds to make the repairs ordered.

“I put in a capital call when I needed money and they said ‘no,’” he said.

Suzuki thinks his reputation has taken a hit short-term from the stint in jail, but will recover as the real estate community realizes he did not commit any criminal acts and was willing to sacrifice himself for his investors.

“In the shorter term it hurts me,” he said. Even his mother, Katsuko Suzuki, a veteran broker at the Corcoran Group, called him a slumlord, he said.

His 24 days in jail were filled with bad cafeteria-style food and phone calls to his unnamed investors, urging them to find a replacement management firm so he could be released. Because he was jailed under civil contempt and not criminal charges, he could have been held nearly indefinitely.

Although he saw a few fights, most of the time he was kept in an area for noncriminals like him, who were locked up on civil charges.

But as a karate instructor, being older, and having a bit of notoriety, he said no one messed with him.

“After they saw me in the newspaper, they kind of left me alone. Everybody was like, ‘Yo, you’re the slumlord, Suzuki?’” That was the worst he heard from fellow inmates, he said, chuckling.