More Apartments Fall Into Distress
NY Times reports: The first signs of financial turmoil came at Riverton Houses in Harlem.
Then came Stuyvesant Town and Peter Cooper Village on Manhattan’s East Side.
Now a third complex built by Metropolitan Life in the 1940s for veterans and middle-class families has run into financial distress after being purchased by speculators during the recent real estate boom. The owners of the sprawling Parkmerced apartment complex in San Francisco announced this week that they would default on their $550 million mortgage, which comes due in October.
The owners in all three cases invested substantial sums in upgrading the aging buildings and renovating some apartments. But ultimately they failed to increase revenue enough to cover the debt payments on the properties, which were heavily leveraged. The recession did not help.
“It’s pretty interesting that they have all ended up in the same place,” said Andrew Florio, an analyst at Real Capital Analytics, a global commercial property research firm. “People assumed they could boost revenues by kicking people out and raising rents.”
MetLife built Parkmerced, Stuyvesant Town, Riverton and a handful of other large complexes in the 1940s amid a national housing crisis in a remarkable effort to provide homes for returning veterans. At Stuyvesant Town, for instance, the company received special property tax exemptions in return for agreeing to build the complex, maintaining relatively low rents and limiting its annual profit to 6 percent.
View the full article on NY Times: More Apartments Fall Into Distress
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Posted by: Nina Turner