The Daily Dirt: This East Village portfolio has sat empty for years. It’s complicated.
An analysis of New York's top real estate news
Roughly half of Raphael Toledano’s East Village portfolio is vacant. Most of the units are rent-stabilized, but keeping them empty doesn’t appear to be a strategic move.
Last June the New York attorney general’s office reached a $3 million settlement with Toledano over allegations of tenant harassment and rent-law violations. The AG had alleged that Toledano’s business model was to “displace existing tenants” of the 15-building portfolio and “illegally deregulate their rent-regulated apartments.”
Toledano sought Chapter 11 bankruptcy protection for the portfolio in 2017 — a little over a month after lender Madison Realty Capital filed to foreclose on the properties. Though then-AG Eric Schneiderman opposed Madison’s move, calling the firm a loan-to-own lender, the bankruptcy judge did allow Madison to at least take over management of the portfolio. The AG’s June 2019 complaint also noted that Toledano’s Madison loan relied on “impossibly high tenant turnover rates.”
A spokesperson for Madison said Toledano “demolished the vacant units a few years ago and therefore the vacant units are not habitable at this time,” Georgia Kromrei reports. So, although perhaps Madison will eventually combine the empty units to achieve higher rents, for now the company seems to be waiting for the bankruptcy case to run its course. In the meantime, Toledano still owns the properties.
It’s somewhat odd that Madison is managing the portfolio when you consider that two different attorneys general have claimed Toledano resorted to unlawful behavior to meet his debt-service obligations to the company. The 2019 agreement with AG Letitia James stipulates that the third-party property manager for Toledano’s buildings must not be a company owned by Toledano. But similar language in the government’s settlement with landlord Steven Croman failed to prevent former employees of Croman’s 9300 Realty from taking over management of his properties.
Speaking of convicted landlords, appellate judges just threw out mortgage fraud charges against Daniel Melamed.
Melamed served 20 days in jail after pleading guilty in 2017 to mortgage fraud and grand larceny. But in April 2019 he filed an appeal, claiming that a warrant used to search his office in 2015 was so broad that it violated the Constitution’s Fourth Amendment protection against illegal search and seizure. A panel of judges agreed, Rich Bockmann reports.
They found that the warrant allowed the AG’s office to “search and seize virtually all conceivable documents that would be created in the course of operating a business.”
Melamed was originally accused of various forms of tenant harassment, including illegally shutting the heat off during the winter for rent-regulated tenants at a Crown Heights building he owned. He also allegedly performed illegal construction and demolition work that exposed tenants to dangerous levels of lead dust.
What we’re thinking about: Will prevailing wage for construction workers be expanded this year? Have you heard of any major developments being put on hold? What’s going on out there? Send a note to firstname.lastname@example.org.
Residential: The priciest residential closing recorded Tuesday was for a condo unit at 15 Hudson Yards, at $7.9 million.
Commercial: The most expensive commercial closing of the day was for an apartment building at 250 North 10th Street in Williamsburg, at $137.8 million. TF Cornerstone is the buyer and Nuveen is the seller.
The largest new building filing of the day was for a warehouse and house of worship totaling 17,933 square feet at 73-25 57th Avenue in Maspeth. New York Insulation filed the permit application.
NEW TO THE MARKET
The priciest residential listing to hit the market was for a condo unit at 220 Central Park South, at $36 million. Corcoran Group’s Manju Jasty has the listing.
— Research by Mary Diduch
A thing we’ve learned…
Mayor Bill de Blasio isn’t bothered that he isn’t the master builder-type. In fact, in response to a Politico New York story, the mayor tweeted: “Politico…I admit it: I worry a heck of a lot more about getting working people free Pre-K AND paid sick leave AND increasing the minimum wage AND driving crime down to historic lows than I do about whether people think of me when they look at big buildings.” The Politico story pointed out that Gov. Andrew Cuomo, who fancies himself a modern Robert Moses, has conversely spent a great deal of time ensuring there is physical evidence of his tenure.
Elsewhere in New York
— Council member Jimmy Van Bramer has decided not to run for Queens borough president, the New York Post reports. He said the decision was the result of “prioritizing my responsibilities as a son and brother.”
— Michael Bloomberg has already spent $248 million on presidential campaign ads, Politico New York reports. The result? Prices for political TV ads have jumped 20 percent since the former mayor launched his bid.
— China has decided not to gift Sunset Park a 40-foot-tall “friendship” archway, The City reports. A spokesperson for Brooklyn Borough President Eric Adams blamed “geopolitical tensions” for the rescission.