Wednesday, August 8, 2012

Vulture Funds Seek To Snatch Title To Small, Violation-Plagued NYC Rental Buildings With Delinquent Debt-Buying Spree Followed By Foreclosure

In New York City, The Real Deal reports:

  • Private equity firms such as Stabilis Capital Management, Madison Realty Capital and Onex Real Estate Partners have been buying debt on small, often severely distressed rental properties in secondary neighborhoods in New York City with little fanfare over the past year.

    The acquisitions resemble activity during the height of the market when private equity firms, often in partnership with local operators, purchased large portfolios of rent-regulated apartment buildings.

    Yet this post-boom trend is different in two significant ways: The properties are much smaller, and the buyers are seeking to gain control of them by buying the debt, instead of directly buying the buildings.

    The trend to buy debt on small properties in New York City mirrors a national investment strategy in which large funds are buying distressed single-family homes and converting them to rentals.

    In New York City, firms are targeting the non-performing debt on rental buildings that often have a high number of violations because the in-place owner cannot cover the mortgage and is cutting back on maintenance, several real estate professionals involved in this practice said.
For more, see Private equity firms snap up debt on small NYC rental buildings (NYC follows national buying trend, but city's real estate firms focus on violation-laden buildings).

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