World’s Third-Richest Man Can’t Hack NYC Rent Stabilization

Being one of the richest people in history does not insulate an investor from the pains of New York City’s rent-stabilized multifamily market.

Sergey Brin of Google co-founding fame sold his stake in a real estate fund back to its manager, Douglas Eisenberg’s A&E Real Estate, Bloomberg reported. The sale of the shares unfolded in December through a limited liability company, but is only being revealed now.

Specifics of the sale back to A&E remain unclear. The value of his stake in the 5,900 units within the fund was approximately $79 million, according to public records, a rounding error for a man with a $268 billion net worth.

“A&E bought out one of our long-term investors, who was willing to accept six cents on the dollar on their original equity investment to divest itself from the New York City multifamily sector,” an A&E spokesperson said.

It’s unclear why Brin became involved with A&E in the first place, though there is a connection to one of the firm’s co-founders, the son of a billionaire who developed corporate campuses in Silicon Valley for the likes of Google.

Brin isn’t the only investor stuck with the larger A&E struggles. Last year, the University of California wrote down a $115 million investment in the same fund by 50 percent.

At the start of this year, A&E agreed to pay $2.1 million to the city to settle more than 4,000 building code violations across 14 properties, mostly in Queens.

In recent years, A&E has faced foreclosure on its 1080 Amsterdam Avenue property in Morningside Heights after allegedly defaulting on a $29 million loan from Apex Bank, as well a $165 million default on Queens apartment buildings and a potential foreclosure at Harlem’s Riverton Square over a $506 million debt.

A&E claims to have invested more than $800 million in capital improvements for its buildings, clearing 35,000 building violations, many of which predate its ownership. Still, the costly race for repairs reflects the distress scenario of rent-stabilized ownership in New York City, a sector dogged by a 2019 law change and last week’s declaration of a rent freeze on stabilized leases.

Meanwhile, Brin’s pennies on the dollar recently stretched into the purchase of the waterfront Miami Beach home of LVMH CEO Michael Burke for $51 million in an off-market deal.

— Holden Walter-Warner