Concerns Raised That Overleveraged, Deteriorating Residential NYC Buildings In F'closure Will Wind Up In Hands Of Speculators, Inexperienced Operators

In New York City, Crain's New York Business reports:

• As tens of overleveraged apartment complexes slide toward foreclosure, fears are mounting that the new owners won't be any better than the ones they replace. Even those with the best of intentions may simply be too inexperienced or burdened by debt to fix up their buildings. Worries also abound that the new owners will drive out existing tenants in the hopes of jacking up rents to increase cash flow.

• Nearly 115,000 city apartments are in overleveraged buildings, according to Rafael Cestero, commissioner of the city Department of Housing, Preservation and Development. While that is less than 5% of the 2.5 million in total rental units, Mr. Cestero insists it is crucial that those properties wind up in responsible hands. If they are left to deteriorate, he warns that they “can bring down an entire city block, an entire neighborhood.”

• Affordable housing advocates are increasingly concerned about such a scenario. “I think we are starting to see the second wave of speculators come into the market,” says Dina Levy, director of the Urban Homesteading Assistance Board.

For more, see Distressed properties' bad bounce (New owners may be no better than the old) (may require subscription; if no subscription, go here, then click link for the story).