The white paper put out by Maverick Real Estate Partners raises serious, and perhaps even grave, concerns for both owners and lenders of rent stabilized properties in NYC.
Healthy banks will adjust their exposure to this asset class and live to see another day while regional banks may not.
Smaller owners of these assets will face a similar fate of the regional banks. With lower valuations and higher interest rates, landlords will have to “ante” up in the form of more equity if they want to stay in the game and see “fourth street” or the “river” and many owners don’t have the financial wherewithal to do that.
How this unfolds: many mom-and-pop owners will lose their assets in foreclosure, title will revert to the lenders who will then aggregate these buildings in large portfolio sales to institutional investors at sizeable discounts.
The irony: hundreds of rent stabilized buildings (and perhaps more) end up in the hands of a few institutional owners (i.e., the proverbial small guy is wiped out).
Leadership matters!
Sources:
Rent Stabilization in New York City – Maverick Insights. (n.d.). https://insights.maverickrep.com/rent-stabilization-in-new-york-city/
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