Chetrit’s Yorkshire Towers Sheds 30% in Value

A 700-unit Upper East Side apartment tower has taken a steep valuation hit, highlighting the growing financial strain on rent-regulated housing in New York.

Yorkshire Towers, a 21-story white-brick rental building at 305 East 86th Street owned by Meyer Chetrit and Stellar Management, lost about 30 percent of its value over the past four years, according to an appraisal cited by Crain’s. Morningstar Credit Analytics pegged the combined value of Yorkshire Towers and a smaller nearby property at $678 million, down from $954 million in 2022.

The drop comes despite strong demand for market-rate units in the building, which features an indoor pool, 24-hour doorman service and proximity to the Second Avenue Q train. Market rents in the property averaged roughly $5,000 a month in 2022 and now reach nearly $16,000 for top-end apartments, according to StreetEasy.

The problem is the other half of the rent roll. About 300 of Yorkshire Towers’ apartments are rent regulated, limiting income growth as operating costs climb. Rents set by the city’s Rent Guidelines Board have lagged increases in insurance, labor and repairs, while the 2019 Housing Stability and Tenant Protection Act sharply curtailed owners’ ability to raise rents after vacancies.

Chetrit and Stellar bought Yorkshire Towers and neighboring Lexington Towers about 12 years ago with plans to boost revenue by combining regulated units with market-rate apartments to create larger, higher-rent homes, Fitch Ratings reported. By 2022, only 57 of 311 targeted apartments had been renovated before the 2019 law undercut the strategy.

Financial stress followed. In 2024, after the owners failed to make a required reserve fund contribution, the property’s $540 million mortgage was transferred to special servicing. The complex carries roughly $714 million in total debt. Lenders later agreed to extend the loan to at least 2030.

Chetrit’s attorney, Leo Jacobs, disputed the framing of the valuation drop, telling Crain’s the decline reflects higher interest rates rather than a fundamental cut in value. Stellar did not respond to a request for comment.

The situation at Yorkshire Towers mirrors a broader trend. Appraisers and brokers say buildings with heavy concentrations of regulated units are routinely seeing double-digit valuation declines.

City officials have also acknowledged the risk: in a recent bankruptcy case involving Pinnacle Group’s rent-stabilized portfolio, the city warned that low rents could make buildings economically unsustainable, leading to deferred maintenance and potential disrepair.

— Holden Walter-Warner