Monday, May 1, 2017

The housing limbo of Raphael Toledano's (former) East Village tenants



The New York Times delved into Raphael Toledano's crumbling East Village real-estate empire yesterday... focusing specifically on the resnt-stabilized residents who accepted buyouts to leave their homes — but have yet to receive their payment.

When we last checked in with Toledano, Madison Realty Capital had replaced the 27-year-old landlord as the property manager of 15 East Village buildings while a deal to transfer the ownership was worked out.

Toledano planned to use $124 million worth of financing from Madison Realty Capital for buyouts and renovations.

Per the Times:

What followed was a familiar playbook: Coerce tenants to give up their valuable rent-regulated apartments with threats of eviction or offers of cash payouts, or both. Once the tenants leave, renovate the empty spaces and lease them for considerably more money. “At the end of the day, it’s a part of the business plan,” Mr. Toledano said in a telephone interview.

Then...

“He made it really clear that he was going to make it a miserable place to live,” said Jen Bekman, 47, an entrepreneur who lives in another Toledano-owned building, on East Fifth Street. She also fielded daily calls and texts from the landlord. “Sometimes he’d lose his temper. You could just tell that he was kind of volatile.”

The clock was ticking for Mr. Toledano. His deal with Madison Realty Capital gave him a year to clear out apartments, then renovate and rent them.

In the end, 140 of the 300 tenants who lived in the 15 buildings signed buyout agreements, totaling $7 million in payouts, Toledano confirmed. (Bekman received the largest payout offer — $600,000 for the $1,900-a-month, one-bedroom apartment she lived in for 25 years.)

However, by the time all the buyout offers were finalized, Toledano no longer had the money to pay his debts.

To shield himself from personal liability, Mr. Toledano had purchased each of his properties using limited liability companies. Last summer, the L.L.C.s that owned the buildings in the Madison Realty portfolio went into default and Madison stopped funding the buyouts.

So the residents who took the buyouts are in various stages of housing limbo. You can read the piece for more.

Meanwhile, Toledano has sold off other pieces of his East Village portfolio, as we've noted.

You may want to warn anyone you know who lives in the West Village.

Back to the Times:

[Toledano] said he was in contract with an investor to buy a $200 million portfolio of properties in the West Village, a neighborhood where he said tenants were less organized.

“I kind of want to get out of the East Village walk-up business, to be honest,” he said, without a hint of remorse. “There is so much scrutiny of the buyouts.”

Previously on EV Grieve:
Foreclosure notice arrives on Raphael Toledano-owned building on 12th Street

Claim: Landlord of 444 E. 13th St. threatened 'to drop dynamite on the building'

Cleaning up 444 E. 13th St.

Report: State investigating East Village landlord Raphael Toledano

Health Department to inspect Raphael Toledano's East Village properties for toxic levels of lead dust

Foreclosure notice arrives on Raphael Toledano-owned building on 12th Street

Report: Raphael Toledano files for Chapter 11; $145 million deal for EV portfolio is off the table

Raphael Toledano tenants take to Midtown streets to speak out against their landlord and his lenders

19 comments:

Giovanni said...

So after royally screwing up hs deals in the East Village due to poor organization and inability to manage his properties properly, Rafi is fleeing to the West Village, where he thinks tenants are "less organized." That says it all. Rafi thinks he can only make money when tenants don't know their rights. Welcome to New York Rafi, where every tenet knows their rights.

His clueless but revealing tstatament also shows a complete lack of knowledge about the West Village, where tenants have been well organized for years, and whose groups have deep pockets to hire the best law firms. He also never heard of Abbie Hoffman, who was a friend of the family, and knew how to organize a protest against anybody, This guy just needs to look at the multi-year efforts residents organized against the NYU expansion and the various Pier redevelopment projects, But no matter where he goes, all tenants have to do is Google his name to find out that he only cares about making money, and his buyout offfers are worthless.

And to whoever said that the numbers I posted last time that the buyouts of up to $600,000 were wrong, The NY Times just confirmed the numbers. Just because you were offered less doesn't mean others werent offered much, much more. It's just sad that people were tricked into moving out of rent stabilized apartments and not even given the money they were promised. I guess that moral compasses are all sold out these days.

Anonymous said...

I felt so bad for these people after I read this story. If I am offered a buyout, and I decide to take it, I am going to get the money before I leave my apartment. Chances are, I will never take a buyout because where will I go in the city that is affordable? I have heard about neighbors in the EV who took buyouts of $10,000. They were long-timers who didn't understand that isn't really a lot of money. Another guy took a buyout of $200,000 and also realized that he would have been better off keeping his apartment after he started looking for a new place to live. You have to do the math.

Cosmo said...

How is this guy able to buy ANYTHING at this point?

Anonymous said...

Raffy, Raffy, Raffy
You got it wrong AGAIN
We also want you GONE
but from the face of the earth
might not be far enough

WE GOT YOUR NUMBER

Anonymous said...

If we trust Toledano's numbers, which we really shouldn't, the average buyout was $50,000. If I was a tenant who was not leaving the neighborhood, that would not be enough.

cmarrtyy said...

Its a great article detailing the depth of depravity that individuals in the real estate business will go to make money. It also shows how unwise and enabling tenants can be allowing building owners to get a way with not paying in full before they move out. It's a caUtionary tale to say the least. RENTERS BE WARE!

Anonymous said...

Scandalous. What an utter scumbag.

Anonymous said...

Doh! Could've avoided all this headache if he'd only picked "West" Village first. Everything would've been peachy, if only he'd gone with "West" Village. No stubborn tenants, no foreclosures over in "West" Village. It is a magical land evidently. Some sort of Valhalla for scumbag slumlords. LOL.

Anonymous said...

I wonder why his obligations to those tenants do not transfer to the "new" owners? Were they verbal agreements only, or did they sign a contract?

I guess I just don't understand landlord/tenant law well enough. I'd have thought the tenants who took the buyouts could maybe place a lien on the building they'd lived in - and my understanding is that a new owner would have to accept the lien, or the previous owner would have to clear the lien, before a transfer of title took place.

Somebody please explain, if possible. Thanks.

Anonymous said...

Money talks. BULLSHIT walks. If I had agreed to 600K from this PRICK I would have an ironclad agreement up-front. Now this poor sucker has no home and no dollar$

Anonymous said...

$600,000? What is the best amount to ask for in a buyout? I've been in my rent-stabilized apt for nearly 7 years. How do we know what is a fair offer?

Donnie Moder said...

Get a lawyer as soon as the landlord makes an offer.

Anonymous said...

Beware of Greeks offering gifts. A law should be passed that would give the tenant the buy out money up front and only upon the funds being transferred into their account should they give up possession. The City should be on top of this.

Anonymous said...

Capitalism at its very worst and not a word from the Mayor.

Anonymous said...

For most people who want to stay in the city, it isn't worth it to take these buyouts. But if you do, you have to hire a lawyer to negotiate, and you have to have the money in your account before you leave your apartment. I can believe anyone would move out without getting the money beforehand.

Anonymous said...

$600,000 for a $1900/mo unit does not sound realistic.

sophocles said...

@8:18 AM: The buyout was so big it makes you wonder if he ever intended to pay it.

Anonymous said...

I was in another evil landlord takeover of a building (not Rafi). I eventually took a buyout and my only word of advice is HIRE A LAWYER!
My lawyer changed the wording of the buyout contract so that the landlord would owe me MORE for every day they didn't pay me after move out date. (That's not in the usual clauses). Also, the law firm handles the escrow transaction and they're pretty stickly about getting their money!

I can't imagine doing it myself. It wasn't a huge amount (certainly not 600K!), but it was far better than if I tried to do it myself.

Anonymous said...

I own buildings in Manhattan. 600k for an apartment doesn't make any sense. I also think the Tolendo guy is a moron and doesn't understand NYC real estate.