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Sugar Hill stops mortgage payments on rent-stabilized buildings

Tenants demand repairs as foreclosures loom

Sugar Hill Capital Partners' David Schwartz and 655 West 160th Street (Getty, Sugar Hill Capital Partners, Google Maps)
Sugar Hill Capital Partners' David Schwartz and
By
Mar 8, 2023, 5:03 PM

Sugar Hill Capital Partners is in danger of losing rent-stabilized buildings in Harlem only years after acquiring them.

The landlord stopped making mortgage payments on some of its Upper Manhattan properties, Gothamist reported. The firm is already facing foreclosure on some of those properties and more could come.

Sugar Hill owns at least 50 rent-stabilized buildings in Upper Manhattan. Local officials recently told residents that a nonprofit may take over some of the buildings in the future, news that surprised some renters.

In 2018, Sugar Hill acquired 53 Harlem apartment buildings owned from Irving Langer’s E&M Management for $250 million. At the time, the multifamily market was booming and Sugar Hill likely didn’t anticipate the forthcoming change to state rent laws, which limited the ability of landlords to raise rents on stabilized apartments.

The change to the rent law and high interest rates have since put owners of stabilized apartments in distress as billions of dollars in debt on multifamily properties comes due in the next couple of years.

Two of Sugar Hill’s foreclosures have already made waves in recent months.

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U.S. Bank — as a trustee for CMBS bondholders — filed in January to foreclose on the six-story, 23-unit property at 121 West 116th Street. The trustee alleged Sugar Hill was in default on a $4.9 million loan after failing to make payments since June.

Months ealier, Sugar Hill was faced with a similar action on a 54-unit property at 4300 Broadway in Washington Heights. It allegedly fell behind on a mortgage to the tune of $16 million, failing to make payments since August.

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When Sugar Hill acquired the portfolio, executive Jay Solomon told The Real Deal the firm felt “a responsibility to our neighbors and the local community to steward these buildings with great care for years to come.” 

Five years later, the landlord has become absent in the eyes of its tenants, many of whom can’t get repairs for their properties, including one the resident leader told Gothamist has been without gas for nearly eight years.

— Holden Walter-Warner

Tags
ForeclosuresHarlemRent StabilizationRental MarketSugar Hill Capital Partners