Showing posts with label Madison Realty Capital. Show all posts
Showing posts with label Madison Realty Capital. Show all posts

Wednesday, December 16, 2020

NY AG: Madison Realty Capital to pay more than $1 million for victims of fraud and tenant harassment

The legal fallout from Raphael (Rafi) Toledano's brief yet soul-crushing stint as an East Village landlord continues.

Yesterday, New York Attorney General Letitia James announced an agreement that secures more than $1 million in rent credits for harassed tenants and provides housing placements for 10 homeless families. 

The agreement with private equity firm Madison Realty Capital comes after James found that the company aided and abetted tenant harassment and other fraud by Toledano.

"Today's agreement stands up for all the tenants harassed and pushed out of their homes by a fraudulent landlord and the lender that financed his unlawful operation," James said in a statement. "Madison Realty Capital aided one of our city's worst landlords in his unlawful scheme, but we're holding the company to account and delivering real relief to the many victims through rent credits and housing placement."

Here's more of the background and current narrative via the AG's office:

With the financial backing of Madison Realty Capital, Toledano harassed tenants through coercive buyouts; executed illegal construction practices; and failed to provide tenants with utilities, repairs, and other necessary services. 

Even with this track record, in 2015, Madison Realty loaned Toledano over $100 million to purchase a 15-building portfolio in the East Village, despite his limited experience in managing a portfolio of this size, evidence of prior tenant harassment, and plans to continue to vacate rent-stabilized tenants and renovate units in violation of law.

Attorney General James’ investigation found that Madison Realty Capital knew or should have known of Toledano’s history, that the proposed conversions were unlawful, and that the aggressive schedule for buyouts and renovations was likely to result in tenant harassment. 

As a result of the loan that allowed Toledano to take over management of the East Village Properties, Toledano did exactly that — harassing hundreds of tenants, engaging in dangerous construction practices, and failing to provide basic services. In March 2017, the East Village properties filed for bankruptcy.

Under the terms of this agreement — which also resolves claims filed against Toledano’s former business entities in New York bankruptcy court — Madison Realty Capital must now take ownership of the 15 buildings in the East Village portfolio subject to $1.05 million in rent credits. 

These rent credits will be shared among the remaining tenants who suffered through Toledano’s mismanagement of these properties. The owners of the buildings will also ensure placement of 10 formerly-homeless families and will adhere to tenant health and safety protections during construction there. 

Under the settlement agreement with the AG's office, Madison wasn't required to admit wrongdoing.

"We are pleased to have resolved this matter without admitting or denying any of the allegations raised, and will continue to work with the tenants and community stakeholders to continue to improve the buildings and bring positive change to the community," a spokesperson for Madison said in a statement obtained by The Real Deal.

In June 2019, James announced a settlement with Toledano to put an end to his harassment of tenants and to prevent him from engaging in speculative real-estate deals designed to profit by violating New York's rent-stabilization laws.

In previous years, Toledano purchased 28 buildings in two separate portfolios from the Tabak family for a total of $140 million. Experienced real-estate players raised red flags about Toledano's heavy reliance on debt.

In an interview with The Real Deal in June 2016, Toledano, then 26, made "frat-tastic boasts about his wealth," including: "I’m worth a fuckload of money, bro."

Previously on EV Grieve:
• Tenants call out Madison Realty Capital: Stop warehousing rent-regulated apartments

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

Wednesday, January 22, 2020

Report: Half of the units in Raphael Toledano's former East Village portfolio remain vacant

Nearly three years have passed since Silverstone Properties, a subsidiary of Madison Realty Capital (MRC), took control of disgraced landlord Raphael Toledano's 15-building portfolio in the East Village.

As The Real Deal reported yesterday, due to drawn-out court proceedings, a bankruptcy plan has yet to be executed for the buildings. According to Met Council, a tenants’ rights group, half of the 279 units have been “warehoused” since 2016. Per TRD: "The portfolio includes 226 rent-stabilized apartments, according to tax filings."

This past December, Tenants Taking Control — the group formerly known as the Toledano Tenants Coalition — reported that there were 136 vacant apartments across the 15-building portfolio. At the time, the group called on MRC to sell the 15 buildings to a nonprofit preservation buyer.

In comments to TRD, an MRC spokesperson blamed Toledano for the delay, saying, “The owner of the properties demolished the vacant units a few years ago and therefore the vacant units are not habitable at this time.” She said that Madison still does not own the properties despite the foreclosure in 2017.

In June 2019, Attorney General Letitia James announced a settlement with Toledano to put an end to his harassment of tenants and to prevent him from engaging in speculative real-estate deals designed to profit by violating New York’s rent-stabilization laws.

The AG's investigation established that Toledano engaged in a pattern of fraudulent and illegal conduct throughout his work as a landlord and real-estate developer. He harassed tenants through coercive buyouts, illegal construction practices and failed to provide his rent-regulated tenants with utilities, repairs and other necessary services, according to the AG's office.

Toledano had received $124 million in cash and lines of credit from MRC to finance his $97 million purchase of the buildings.

Previously on EV Grieve:
Tenants call out Madison Realty Capital: Stop warehousing rent-regulated apartments

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

Friday, December 20, 2019

Tenants call out Madison Realty Capital: Stop warehousing rent-regulated apartments



More than 50 residents, community activists and local elected officials gathered on Tuesday afternoon in the rain outside 325 E. 12th St., a building owned by Madison Realty Capital (MRC) that serves as a de-facto office for MRC’s property management arm, Silverstone Properties.

The group, led by Tenants Taking Control (formerly known as the Toledano Tenants Coalition), called on MRC to sell their 15 buildings to a nonprofit preservation buyer.

They also wanted to bring attention to the practice of property owners letting rent-regulated apartments sit vacant in the aftermath of the Housing Stability and Tenant Protection Act of 2019.

According to the tenants, there are 136 vacant apartments across the 15-building portfolio, which has a total of 279 units. (MRC took control of the portfolio from disgraced landlord Raphael Toledano in the spring of 2017.)



"It is unconscionable to keep these apartments empty, when affordable housing is so rare," said TTC member Beth Carey.

"We have persevered for four long years — enduring an onslaught of insincere buyout badgering, construction as harassment, elevated lead dust, vermin infestations, and unfair lawsuits," said Sandra Mayer, a TTC tenant. "We have watched our friends and neighbors be picked off one by one until these once vibrant buildings stood dark and quiet. This community of working-class families and artists should not lose its spirit. It is our goal to bring back a solid base of rent-stabilized housing in the East Village."

Joining the tenants were several community groups and elected officials, including members of the INK Tenants Coalition, Cooper Square Committee, Lead Dust Free NYC coalition, St. Nicks Alliance, Good Old Lower East Side, United Neighborhood Organization (UNO), Manhattan Borough President Gale Brewer, Assemblymember Harvey Epstein, Assemblymember Deborah Glick, Sen. Brad Hoylman and City Councilmember Carlina Rivera.


[Sen. Hoylman]


[Assemblymember Glick]



Photos courtesy of the Cooper Square Committee.

Previously on EV Grieve:
Health Department to inspect Raphael Toledano's East Village properties for toxic levels of lead dust

Ongoing concerns about demolition work and elevated lead levels in Toledano-owned buildings

Tenant activists praise lead reform, urge for more protections from city against predatory landlords

Petition asks Madison Realty Capital to waive legal fees for evicted East Village family

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

Santa delivers sacks of coal to Madison Realty Capital, Rafael Toledano's lenders

Friday, May 3, 2019

Developers eye air rights at Campos Plaza for long-stalled 14th Street development


[The long-stalled 644 E. 14th St.]

Back in December, Mayor de Blasio announced that the New York City Housing Authority would sell its unused air rights to developers for the first time ever as part of plan called NYCHA 2.0.

The cash-strapped NYCHA said that it would transfer a portion of its 80-million square feet of air rights to generate $1 billion in capital repairs for nearby developments.

PincusCo examined city records to find that several developers have spent hundreds of thousands of dollars to lobby the city for these air rights.

Many familiar names are on the list. According to the PincusCo investigation, Madison Realty Capital hired one of the city’s most active government lobbying firms, Capalino+Company, to approach NYCHA about the air rights at Campos Plaza II adjacent to the long-stalled development at 644 E. 14th St. at Avenue C.

Per PincusCo:

Madison Realty is not the fee owner, but the lender on the project. The property owner, Shulamit and Shaya Prager’s Opal Realty, purchased 644 East 14th Street for $23 million in 2016, from the Rabsky Group. At the same time, Opal borrowed $52 million from Madison Realty Capital.

How the firm will obtain air rights from NYCHA for its site is not clear, however, because the adjacent NYCHA development, Campos Plaza II, has no available residential air rights, according to a PincusCo Media analysis of city land use records.

That said, Madison Realty almost certainly has a legitimate strategy to obtain air rights. The firm may be seeking an upzoning on the NYCHA parcel, which would make air rights available.

Or alternately, the developers may be seeking a lot merger with two other tax lots co-owned by NYCHA that have more than 300,000 square feet of community facility space available. That would allow the developers to build, for example, a college dormitory space for students. Scores of New York University students live in apartments across the street at Stuyvesant Town. Madison Realty did not respond to a request for comment.

As previously reported (see the links at the bottom of this post), the pre-air-rights plans called for a 15-story residential building with space for a health-care facility.


[The most recent rendering of the development]

There hasn't been much, if any, activity at this southwest corner of 14th Street and Avenue C in 15-plus months. According to city records, the new building permits expired in December. As the PincusCo report notes, this stall may be intentional. "With additional air rights, the project could presumably be larger."

Also, in late January, the Commercial Observer reported that Second Avenue Deli owner Jeremy Lebewohl filed a $10 million lawsuit alleging that his five-story residential building at 642 E. 14th St. sustained damages by the foundation work next door at No. 644.

As for the currently stalled new development, here's a rehash of the info I received on the project in September 2016:

Madison Realty Capital (MRC), an institutionally-backed real estate investment firm focused on real estate equity and debt investments in the middle markets, provided a $52.0 million first mortgage loan for the acquisition of a development site in the East Village and construction of an approved 76,259 square foot mixed use development on the site.

The plans for 644 East 14th Street include 50 residential units, 8,064 square feet of retail space with 200 feet of frontage on 14th Street and Avenue C, and 21,575 square feet of community facility space.

The property is located at the corner of 14th Street and Avenue C, along the Northern border of the East Village and directly across the street from Stuyvesant Town. Residential units will offer contemporary finishes and large balconies with East River views. The borrower is currently finalizing a lease with a major New York hospital to occupy the entire community facility portion of the new building.



This corner property previously housed the single-level R&S Strauss auto parts store, which closed in April 2009.

In 2015, Madison Realty loaned $124 million to Rafael Toledano, a then 25 year old with no track record as a landlord so that he could buy a portfolio of 15 buildings, mostly in the East Village. He eventually defaulted on Madison's loan.

Previously on EV Grieve:
Development back in play for East 14th Street and Avenue C

More details on the sale of 644 E. 14th St.

Here comes a 15-story retail-residential complex for East 14th Street and Avenue C

Prepping the former R&S Strauss auto parts store for demolition on East 14th Street and Avenue C

City OKs 15-story mixed-use retail-residential building on 14th and C

14th and C now waiting for the Karl Fischer-designed 15-story retail-residential complex

14th and C still waiting for its Karl Fischer-designed retail-residential complex

Report: New owners for the empty lot at 14th Street and Avenue C

Friday, November 30, 2018

Tenant activists praise lead reform, urge for more protections from city against predatory landlords



On Tuesday, members of the Lead Dust Free New York City coalition marched through parts of the Lower East Side and East Village, stopping at three buildings — 113 Stanton St., 57 Second Ave. and 233 E. Fifth St. — "where shoddy renovations have released lead dust into the air."

The group, including organizers from the Cooper Square Committee and Icon Tenants United, Tenants Taking Control and the Alliance of Croman Tenants, also praised elected officials for introducing laws aimed at protecting them and urged them to continue pushing for more lead reform.











Here's more background via a news release from the Cooper Square Committee...

Known collectively as the Stand for Tenant Safety (or STS) Laws, they included a new, Real Time Enforcement statute, as well as a tenant bill of rights that must be posted in buildings where construction takes place. They also created a new position within the Department of Buildings, called the Office of the Tenant Advocate.

This year, the City Council is looking at 25 more new bills to further protect tenants from lead exposure. The thrust of some of these bills is to break down the silos that current separately the Department of Health & Mental Hygiene, the Department of Buildings and the Department of Housing Preservation and Development.

Marchers demanded that these laws also be enacted to further prevent the erosion of affordable housing in New York City.

As in other cities around the United States ... New York is being inundated by a hyper-gentrification tsunami that has been permanently pushing middle- and lower-income tenants out of their homes. Some landlords, hungry for quick returns, continue to pursue the practice of predatory equity, which worsens the city’s affordable housing crisis. These same landlords typically ignore safe work practices while renovating their buildings.



All photos courtesy of Tenants Taking Control

Previously on EV Grieve:
Health Department to inspect Raphael Toledano's East Village properties for toxic levels of lead dust

Ongoing concerns about demolition work and elevated lead levels in Toledano-owned buildings

Get the lead out: Tenants call for protections from lead dust during renovations

Friday, September 28, 2018

East Village residents ask Madison Realty Capital to 'See the Light'



In the rain on Tuesday evening, members of Tenants Taking Control, a coalition of residents from buildings formerly owned by Raphael Toledano, along with the Middle Church Jerriese Johnson Gospel Choir and the Cooper Square Committee, held a march and vigil to urge Madison Realty Capital (MRC) to end their pursuit of nearly $250,000 in legal fees from the SmithStone family.

The congregation of activists, clergy, and community members assembled on Union Square and later marched to 24th Street, where the group held a candlelight vigil outside the apartment of MRC’s co-founder and managing principal Josh Zegen, urging him to release the family from the responsibility of paying the corporation's legal fees.

Here's background on the situation via the Cooper Square Committee:

In October 2003, the SmithStone family moved into an apartment at 233 E. Fifth St. They opened the nonprofit Phoenix Theatre Ensemble a year later. Their theatre offers a full season of performances as well as lessons in theatre to aspiring actors, seniors and kids in local public schools.

Their building was purchased by Raphael Toledano in 2015, with a loan from Madison Realty Capital. The fledgling landlord asserted that the family’s apartment had lost its rent-stabilized status in 2003 and sued to retake possession of the unit, but the family opposed Toledano’s claim, arguing that the apartment was rent stabilized. The legal battle lasted 34 months. In the midst of it, Toledano defaulted on his loan. Madison Realty Capital reclaimed the properties as de-facto landlord and continued prosecuting the lawsuit.

In June 2018, the Appellate Division of NY State Supreme Court ruled against the family, and Madison Realty Capital immediately began eviction proceedings. Due to a clause in their lease, the SmithStones are now being held accountable by Madison's lawyers for Toledano/Madison Realty Capital's legal fees, amounting to about $250,000. As dedicated artists and educators with 3 college-age children, these fees would be disastrous to the family.

Here are a few scenes from Tuesday's march and vigil...

















This is the second SmithStone rally for the group. On Aug. 23, Tenants Taking Control, supporters of the family and Assemblymember Harvey Epstein also gathered outside Zegen’s home, calling on Madison to drop their pursuit of the legal fees.

The court date to decide whether the family is subject to these fines was adjourned until early November.

Photos via the Cooper Square Committee.

Previously on EV Grieve:
Petition asks Madison Realty Capital to waive legal fees for evicted East Village family

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

Santa delivers sacks of coal to Madison Realty Capital, Rafael Toledano's lenders

Amid claims of being a rent-stabilized tenant, Raphael Toledano faces eviction from his home

Wednesday, August 15, 2018

Petition asks Madison Realty Capital to waive legal fees for evicted East Village family


[5th Street buildings that were part of Raphael Toledano's portfolio]

After a lengthy legal battle that started with landlord Raphael Toledano, longtime East Village residents Craig Smith and Elise Stone and their family have been evicted from their rent-stabilized apartment on Fifth Street.


[Smith, Stone and family]

With Toledano in bankruptcy, Madison Realty Capital is the de-facto landlord. Due to a clause in their lease, Smith and Stone are now being held accountable by Madison's lawyers for Toledano/Madison Realty Capital's legal fees, which amount to $250,000.

This petition is asking Madison Realty Capital, who reportedly manages over $4 billion of capital, to waive their legal fees.

The following, via the EVG inbox, is from the group Tenants Taking Control...

In July of 2018, Craig Smith and Elise Stone, their three college-age children Kerem, Tes and Hakima, and Elise's ageing mother Sandy were given 12 days to leave their home of 15 years — a walk-up apartment in the East Village.

Craig and Elise — much can be said about this extraordinary couple. They are parents, thespians, teachers and artists who have spent a lifetime giving to their community. Notably, they started up a local, award-winning, nonprofit theater company in 2004 that, in addition to producing shows, runs educational programs for aspiring actors, children and seniors.

The SmithStones were sued for eviction in 2015 by their new predatory landlord, Raphael Toledano, whose lawyers spotted a loophole in the city's rent-stabilization law. Rather than give up, Craig and Elise fought back. Their motivation was not just self-preservation — in keeping with their community spirit, they aimed to protect other New York City rent regulated tenants who face similar gentrification pressures. Had they won, thousands of deregulated apartments in the city could have been re-regulated.

The legal battle lasted 34 months. In the midst of it, Toledano defaulted on the loan he'd gotten from Madison Realty Capital to buy their building (along with 14 others). Although still owned by Toledano's LLC, in the bankruptcy Madison Realty Capital became the de facto landlord of the buildings, put up the money to manage the properties, and continued prosecuting the lawsuit.

In June of 2018, the Appellate Division of NY State Supreme Court ruled against Craig and Elise. Madison Realty Capital told them to leave their home, and NYC lost yet another affordable apartment. The loss to the neighborhood has been devastating.

Due to a clause in their lease, the SmithStones are now being held accountable by Madison's lawyers for Toledano/Madison Realty Capital's legal fees, amounting to $250,000. As dedicated artists and educators, this couple does not have that kind of money.

THIS PETITION ASKS MADISON REALTY CAPITAL TO DO THE RIGHT THING AND PAY ITS OWN LEGAL COSTS.
It is a private investment fund, so its earnings and revenue are not publicly disclosed. But last month, Madison's CEO Josh Zegen told The Commercial Observer: "We manage over $4 billion of capital and we have every piece of the business in-house." It's likely that they can afford their own legal fees, and still be a very profitable business.

In the same interview, there was this exchange:

COMMERCIAL OBSERVER: "What keeps you up at night?"

JOSHUA ZEGEN: "The unknown. You’re starting to really feel the rate creep more than you did six to nine months ago..."

So, the TTC (Tenants Taking Control) asked the same question of the SmithStones.

TTC: "What keeps you up at night?"

CRAIG SMITH: "Bankruptcy. No money to pay for my kids' college, no money to pay for a dentist, long commutes... the fear that we won't be able to keep the theater going, and no longer be able to show seniors and children the joy of being involved in the arts."

This family is in a precarious situation now, and really needs the help of the greater community. They have already lost their home. Please add your name to this petition, to have Madison Realty Capital relieve the SmithStones of the crushing, unfair debt burden they will otherwise face.

Here's the link to the petition.

Previously on EV Grieve:
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

Santa delivers sacks of coal to Madison Realty Capital, Rafael Toledano's lenders

Amid claims of being a rent-stabilized tenant, Raphael Toledano faces eviction from his home

Friday, December 22, 2017

Santa delivers sacks of coal to Madison Realty Capital, Rafael Toledano's lenders



The following is from the EVG inbox via Tenants Taking Control ...

A festive group of holiday carolers from the TTC (Tenants Taking Control, formerly the Toledano Tenants Coalition) visited the Midtown offices of Madison Realty Capital on Monday morning. But the songs they sang were much more ironic than celebratory.

"Madison is Coming to Town" was sung to a familiar tune, but featured such lyrical enhancements as "♫ They’re making a loan ♪ They’re raising the price ♪. They’re funding a landlord who’s not very nice ♫ Madison is coming to town ♪"



In 2015, Madison Realty loaned $124 million to Rafael Toledano, a 25 year old with no track record as a landlord and a conviction for aggravated assault, so that he could buy a "portfolio" of 15 buildings in Manhattan, mostly in the East Village.

Through demolition that generated lead dust, outright neglect of the properties, aggressive buyout offers and threatened lawsuits, Toledano removed about a third of the 450+ rent-regulated tenants from those buildings before defaulting on Madison's loan and then facing foreclosure in February 2017.

On Monday, the group of remaining tenants also sang "I Had a Little Landlord" (to the tune of "I Have a Little Dreidel"). One verse went: "♪ I had a little landlord ♫ He bought the place one day ♪ He got a check from Madison ♫ And then he couldn’t pay! ♪"

The LLCs once controlled by Toledano staved off the foreclosure in March 2017 by each declaring bankruptcy. Through bankruptcy court, control of the buildings was given over in April to Silverstone Properties, the property management arm of... Madison Realty Capital. If you think that sounds kind of circular, you're not alone. It's a bit like singing a round.

In May 2017, the New York State Attorney General's office filed a massive objection (PDF here) and declaration, accusing Madison Realty Capital of practices “Consistent with a Predatory ‘Loan to Own’ Business Model.” The filings dissected the striking irregularities of the deal. Among other oddities, it references...

• "fatal flaws" in the underwriting of the loan, as evaluated by the NYC Department of Housing Preservation and Development. • clear evidence that Signature Bank (an investor in the loan) foresaw that Toledano would default, and that Madison was well positioned to take over the properties.
• floor plans for the apartments that show newly-added, windowless bedrooms, which are illegal in NYC.

Bankruptcy court hearings regarding the case have been repeatedly postponed by Madison since the AG and the DHCR's Tenant Protection Unit publicized through its filings that the ongoing investigation of Toledano had been expanded to include Madison.



On Monday morning in Midtown, Santa Claus himself made an appearance. He had a special gift for the principals of Madison: Gift-wrapped little sacks of coal. Bellowing loud enough to (possibly) be heard on the 37th floor, he pronounced that the company had been naughty.





Previously on EV Grieve:
Amid claims of being a rent-stabilized tenant, Raphael Toledano faces eviction from his home
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

East Village tenants pay landlord Raphael Toledano a visit at his Upper West Side home