East 5th Street, west of 2nd Avenue, where several buildings are in foreclosure
The call to action follows years of alleged hazardous conditions, including illegal construction, lead dust exposure, and multiple foreclosures.
The residents, part of the Tenants Taking Control Coalition (TTC) — a group that first formed as the Toledano Tenants' Coalition in 2015 when the buildings were purchased by the infamous landlord Raphael Toledano, then in his mid-20s — say they've had enough instability and want a long-term solution.
Madison Realty Capital (MRC) initially financed Toledano's acquisition of the buildings through a securitized loan from Signature Bank. (At the time, experienced real estate professionals raised concerns about Toledano's heavy reliance on debt.)
Toledano's notorious tactics, which included widespread tenant harassment and construction abuse, led to a lifetime ban in January 2022 from the New York real estate industry. In its findings, the Attorney General also stated that Madison Realty Capital "aided and abetted tenant harassment" and "knew landlord Toledano was engaging in fraud and harassment."
Eventually, the buildings entered foreclosure, and ownership passed to MRC — the same firm that had initially funded Toledano.
As The Real Deal reported in March:
Madison got pulled in by association. [NY AG Letitia] James sued the firm for lending Toledano $124 million on an East Village portfolio with the understanding the landlord would aggressively and illegally deregulate units. Madison eventually settled, admitting no wrongdoing. But in 2021, it ended up with that East Village collateral —15 buildings half-gutted by Toledano's half-baked deregulation plan. Madison paid $153 million for the deal in a credit bid after Toledano liquidated the assets.
But for tenants, the change brought little relief. In 2021, they say, MRC initiated construction aimed at combining smaller, rent-stabilized units into large, high-rent "Frankenstein" apartments, some reportedly listed for $9,000 or more. The work was disruptive and often dangerous, they allege, contributing to deteriorating living conditions across the buildings.
When Signature Bank failed in 2023, the federal government intervened to prevent widespread fallout, establishing a joint venture to oversee the affected loans. That venture, composed of four entities, is managed by Community Stabilization Partners, with the Community Preservation Corporation serving as the managing partner.
Earlier this year, after trying to bring the Signature loans back to good standing, Community Stabilization Partners took a subset of sponsors described as "unresponsive and uncooperative" to court, as The Real Deal reported on March 11, including Madison Square Realty.
Now, TTC members are demanding two things: that the Community Preservation Corporation meet directly with tenants about ongoing problems in the buildings and that the properties be sold to a nonprofit preservation buyer committed to long-term housing stability.
Adding to the urgency, the New York Post recently reported that MRC has not made a mortgage payment since January 2024 — despite managing more than $23 billion in assets, including the new high rise on 14th Street and Avenue C.
For tenants, this raises concerns that MRC is angling for more favorable loan terms than those originally extended to Toledano, echoing the very cycle that led to years of instability in the first place. (The Post reports this is part of a broader trend of landlords stopping making mortgage payments and ultimately making rent-stabilized units even more scarce in NYC.)
For TTC members, the message is clear: after a decade of disinvestment and displacement, the time has come for meaningful, community-centered change.
"For many tenants of the 15 East Village buildings, this has been home for decades," Kathy Berry, a long-time tenant of 325 E. 12th St. and member of the Tenants Taking Control Coalition, said in a release distributed by the Cooper Square Committee. "Over the years, we have dealt with slow response to do repairs, sloppy repairs, and harassment (no cooking gas for 14 months). Basically, we want safe and clean buildings. Tenants want a preservation buyer to purchase the buildings rather than another private equity firm."
Jodie Leidecker, an organizer with Cooper Square Committee, said in a statement: "After everything Madison Realty Capital has put these tenants through, it's sad to think they could be rewarded with the terms they prefer on these buildings while CPC does nothing to help tenants. That would be like all Madison's wishes come true at the tenants' expense. The tenants, however, are rightly standing up and demanding a voice in the process. I wouldn't bet against these tenants."
The 15 former Toledano East Village buildings involved in foreclosure are:
• 27 St Mark's Place
• 66 E. Seventh St.
• 514 E. 12th St
• 223 E. Fifth St.
• 229 E. Fifth St.
• 231 E. Fifth St.
• 233 E. Fifth St.
• 235 E. Fifth St.
• 228 E. Sixth St.
• 253 E. 10th St.
• 323-325 E. 12th St.
• 327 E. 12th St.
• 329 E. 12th St.
• 334 E. Ninth St.
• 510 E. 12th St.
There is a single foreclosure action for all the former Toledano buildings: SIG RCRS D MF 2023 VENTURE LLC v. EVP 27 ST MARKS PL LLC et al.
Gerald Lebovits, a judge of the New York Supreme Court 1st Judicial District, is assigned to this case,
The defendants have until June 23 to respond.
16 comments:
Unfotunately this is the tip of the tip of the ice berg. When costs to run housing exceed the rental income, buildings will fall into foreclosure. Its great we all want a rent freeze - but what about a freeze on building expenses. Insurance costs are up 40%, energy costs are up, real estate taxes are up, costs to comply with the all the regulations are dramatically up (eg lead abatement work), labor costs are up ..... yet building owners have no way to reasonably raise rents to mitigate these rising costs. NYCHA and non profits are also experiencing the same issues. Politicians appease their constituents with demanding "rent freezes" - but the issue is not so simple. Buildings need to be maintained to provide good services to tenants and the maintenance costs have increased dramatically over the years. So until something changes - we will unfortunately keep seeing rent regulated buildings go into foreclosure and tenants suffer due to lack of maintenance and services.
Wow
Thank you for saying this. I live in a coop which is by definition non-profit and our maintenance has gone up every year recently well in excess of inflation, for the costs identified above. No-one is defending Toledano or MRC when they point this out. People decry the inadequate housing supply but our state and local governments have taken away the economic rationale for rental properties.
I checked out rents listed online for a random handful of these buildings. I found monthly rents ranging from $2500 to $9000, with most in the $4500 to $9000 range. If MRC can't meet expenses with rents like that, perhaps they should step away.
also, WOW
This is the correct take
Sure anon 7:29 aka real estate shill. With rents that go as high or higher than $10k a month if the re developers can’t make their nut they deserve to be out of the business. About renegotiating the mortgage company that makes billions a year claims they can’t make? It is beyond a trend and the expected way of doing business. (Mortgage companies and the developers expected to be able to continue to raise rents and toss tenants at will and never thought pro-tenant laws would pass. They are still fighting new laws the way up to the Supreme Court. Icon et al do it all the time despite outsize profits.) BTW, there is a massive Frankenstein apartment in my building, two rent stabilized apartments combined. One housed the family that owned CBGBs.. The rent is $16,500 for 5 bdrms and no real living room or kitchen, just a kitchenette in a bumped out hall.. Don’t believe Real Estate Board of NY. They are the biggest spenders on political donations and lobbyists in the state.
Don't buy the narrative of how expensive things are. My landlord owns multiple buildings in the neighborhood and sold one set a few years ago for nearly 20 million. But he keeps rent stabilized apartments empty in his other buildings, taking a tax deduction while lobbying for the program to end. These are well maintained apartments that wouldn't need any major upgrades to be rented. He is not the only landlord doing this in the area.
Same in my building. Older woman down the hall passed away 2 years ago, apartment still vacant. Landlord won't rent it at the legal, stabilized rent. God forbid anyone takes it and makes it their long term home.
There’s such a massive disconnect. It is incredibly costly and difficult to manage a building and “freezing” rents and/or maintenance fees only exacerbates the problem. Capping rents only means transferring cost to someone- typically tax payers. It’s an added tax. And before everyone yells at the management company or their coop board, consider all the ways local and state governments are increasing costs to everyone. An immediate example my coop is dealing with are the astronomical costs associated with “net zero” climate laws. On the one hand, there are some subsidies floating around to help offset the costs and the costs themselves are astronomical. There’s a massive tax burden coming and going (both on the subsidy side and the out of pocket side). So yeah, wallops our coop, maintenance fees are skyrocketing people are having to move out - and any subsidies meant to “help” are actually just contracts to the tax burden and cost of living. This is what management companies have to navigate
Every single year, landlord expenses are studied by the rent control board. Literally. The data is out there. Oddly enough, landlords almost NEVER cite to this info when complaining about how their rising expenses justify making people live in hellpits. (I wonder if you're the same guy constantly spreading this landlord propaganda over on citydata...)
If you read about the NYAG action, you'll see that Madison lent money to Toledano KNOWING that the rent rolls could not support debt service unless rent-stabilized tenants miraculously stopped renting in large numbers. In other words, it built its financing on the assumption that the landlord would break the law and drive people out of their homes. It deserves to take a bath on this.
This applies to buildings where all the tents are stabilized. You are talking about market rare. People didn't anticipate all the pro tenant laws. Now they can't make money or are losing money. This is going to become a huge problem
Cool story bro. But they isn't what we are talking about. And there is no tax deduction for keeping apartments vacant. That's not true.
According to the Rent Guidelines Board 2025 Income and Expenses Study, landlord profit increased by 12 percent. So, this makes landlord profit over 50 percent per year.
For the past nine years Morton Tabak’s old tenants in FIFTEEN buildings in the East Village have been fending off aggressive, predatory and fiscally irresponsible acts stemming from Madison Realty Capital. MRC initially backed “Rafi” Rafael Toledano in his bid for this East Village Portfolio with what the NY Attorney General called “a loan to own scheme" (loaning funds to Toledano at rates near impossible to service which he tried to do by ridding the buildings of rent stabilized tenants). Toledano went belly up, was banned from real estate for predatory acts against tenants, and the properties ended up in foreclosure. The Attorney General ordered MRC to pay $1,000, 000 in rent credits to those tenants for its part in the scheme and it ended up owning the properties.
MRC then Frankensteined (combined dwellings) as many apartments as they could in order to skirt rent laws, allowing them to set new unlimited, unregulated prices for previously regulated affordable housing. Now, after years of inept landlording, apartment warehousing, performing vindictive acts such as mowing down residents’ gardens, heating residents’ apartments in the summer months, and shoe-string operations with no (legally required) resident superintendents , MRC seems to be going belly up-or at least belly up on these fifteen buildings; This portfolio is again in foreclosure.
While MRC has been dogging these District 2 tenants-backing a landlord who’s plan was to harass tenants out, with an eye (as the AG said) toward owning the buildings after he’d done the dirty work, they’ve been given special treatment by that same District’s Community Board 3’s Land Use & Zoning Committee in the form of a height variance for a 24 story high rise they’re constructing at 14th Street and Avenue C. Not only have they been given the variance by CB3, but NYCHA has also ceded a small parcel of land for the project! Along the way MRC has damaged a neighboring tenement building so badly that the entire building’s residents have been displaced!
A tenant spoke out about the documented history between Madison Realty Capital and CB3 residents at that Land Use Committee meeting, and asked why our district would approve a variance for such a problematic actor in its own district?! The question went unaddressed and the variance was given. It appeared to be a fait accompli, agreed upon before the public committee meeting.
Former tenants of Morton Tabak, then Rafael Toledano, and now Madison Realty Capital and soon somebody else are wondering WHY Madison Realty Capital is permitted, and encouraged by being given special dispensations, to conduct business as usual in District 2? Why doesn’t our community board and our elected officials like Carlina Rivera and Harvey Epstein stand up for long term residents by standing up against operators like Madison Realty Capital? And, they are left scratching their head about how MRC is solvent enough ($2 billion in equity according to their home page) to be developing multiple major building projects while it forecloses on buildings it has been responsible for destabilizing in so many ways.
You own your apartment, so perhaps you should stay out of renters' business. We are not the same.
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