By Cristina Alesci

Several South Bronx tenants say already-poor housing conditions have worsened since a group of private investors assumed control of their buildings nine months ago, even though the new buildings’ manager says a multi-million-dollar rehabilitation of the properties is underway.

“Prior to the new owners, we used to have heat come on in the afternoon until about midnight,” said Bibi Khan, a tenant of 975 Walton Ave. in Highbridge. “Now, we get heat from 5 p.m. to 7 p.m. and that’s it.”

Khan lives in one of 51 buildings that were acquired in February for $300 million by a group of private investors. According to the real estate industry website TheRealDeal.com, many of the apartments are rent stabilized.

The transaction involved the sale of 3,600 units in Highbridge, Mount Eden, Grand Concourse, Wakefield and other Bronx neighborhoods. The two companies involved in the purchase were Blackrock Realty Advisors, Inc.— a subsidiary of New York-based Blackrock, Inc.— and SG2 Properties, LLC— a Manhattan-based real estate investment firm— according to a spokesperson for Blackrock. SG2 Management LLC, the registered managing agent for the properties, confirmed that SG2 Properties is affiliated with the ownership of the buildings.

At least fifteen tenants living in four different Bronx properties managed by SG2 Management said they experienced prolonged interruptions in basic services during October and the beginning of November. In one apartment building, 1565 Townsend Ave., tenant complaints prompted local housing advocates to send SG2 Management a letter about the problem.

“For over a week tenants were forced to boil water to bathe and had an extremely difficult time washing their dishes in the freezing cold water,’’ wrote Nelson Diaz Jr., a community organizer for Community Action for Safe Apartments (CASA), a local tenant advocacy group, in a letter to SG2 Management. In a response to Diaz, SG2 Management said it was working on repairing the problems in the building. A Blackrock Inc., spokesperson declined to comment on the conditions of the building.

Noel Intner, a SG2 Management representative, points out that the buildings suffered years of deferred maintenance under the ownership of previous landlords. However, Intner says, the new owners plan to make major capital improvements to the properties. He says the new owners have made approximately $7 million worth of upgrades to mechanical and security systems since acquiring the buildings in February, with millions more in capital improvements scheduled for next year.

“SG2 Management has no intention of managing buildings that are in disrepair,” said Howard J. Rubenstein, a spokesperson for SG2 Management and president of Rubenstein Associates, Inc.

Tenants Wait For Repairs
For tenants at 1565 Townsend Ave., however, repairs are not happening soon enough. Bonnie Goldstein, a tenant in the building, said the new landlord is less responsive than the previous one.

“It is a form of harassment that all of a sudden the boiler isn’t working,” said Goldstein, a 25-year resident who said she has never seen conditions in her building this bad. Goldstein maintains that residents have gone for ten-day intervals without heat or hot water. “We haven’t had a decent day of hot water since last month,” said Goldstein. “They are a big company with lots of money, we shouldn’t have any problems with the heat or hot water.”

Goldstein’s building has racked up nearly 50 city housing code violations since late July for everything from roach and mice infestation to leaky faucets, according to the New York City Department of Housing Preservation & Development’s (HPD) website.

Modene Dawkins said her intercom at 1495 Morris Ave. has been broken for three months. I have been in the building since 1969,” said Dawkins. “In the past, once you reported the broken intercom, they used to fix it.”
Frustrated tenants charge that their frequent and repeated calls to the management office go unanswered and their complaints are ignored. Sharon Walker, a 19-year resident of 975 Walton Ave., concedes the previous landlord did little more than patchwork repairs. “But at least he sent someone when I called about repairs,” said Walker.

SG2 Management’s Intner, however, insists that his company responds to all complaints in a timely manner. According to Intner, whenever a tenant logs a complaint with building management, SG2 Management dispatches a contractor immediately to remedy the problem.

Fueling Uncertainty
Tenants interviewed for this article, however, disagreed. They say the non-responsiveness of the management office raises suspicions that the new landlord wants them out of their apartments. “They figure if they don’t make repairs, people will get fed up and leave,” said Glenda Poe, a tenant of 1475 Sheridan Ave.

Advocates for affordable housing say such fears are understandable given the nature of Bronx real estate. “Anytime somebody is buying these buildings at current prices, you have to be a little concerned,” said Greg Lobo Jost, Deputy Director for University Neighborhood Housing Project, a nonprofit dedicated to affordable housing. (Jost is also a contributor to the West Bronx News Network Blog).

Much like real estate trends elsewhere in the city, the price of residential apartment buildings in the Bronx has increased over the past several years. According to the results of an analysis by New York University’s Furman Center for Real Estate and Urban Policy released last year, prices for multi-family buildings in the Bronx rose approximately 43 percent from 2000 to 2005.

The price of rent in the Bronx, however, is lower compared to other parts of the city. In fact, the Furman Center research showed that Bronx rents were the lowest in the city for 2005, the last year included in the study. In addition, housing advocates say the cost of operating buildings is rising faster than rents are in the Bronx. “In the Bronx, net operating income for your average apartment building has decreased over the last couple of years,” said Jost. “The buyers will have to raise rents to make a profit. There is no way around it.”

The New York City Rent Guidelines Board’s lease guidelines, however, limit how much landlords of rent-stabilized apartments may increase rents. For a one-year renewable lease, landlords can increase rents by 3 percent. The guidelines allow for increases in addition to the 3 percent in certain situations, for example, when a landlord makes improvements to an apartment or a tenant vacates a unit.

Raising rents in these buildings to market level will take time, which is why housing advocates refer to some recent buyers of larger chunks of Bronx real estate as “patient capital.”

“These investors are willing to take the loss in the short term with the idea of pushing up rents years down the line,” said UNHP’s Eric Fergen. “I don’t think it is going to take years and years. I think rents will increase a lot sooner than most people are ready for.”

A Recent Trend
Although institutional investors have traditionally shied away from residential, rent-regulated buildings, recent transactions indicate this may be changing.

In 2006, Apollo Real Estate Advisors, the real estate arm of a large private equity firm, and non-profit housing developer Housing and Services, Inc. led a $100 million acquisition of a housing complex in the Soundview area of the Bronx. Also, earlier this year, Taconic Investment Partners in a joint venture with a fund managed by ING Clarion Partners acquired approximately 1,400 apartments in the Eastchester section of the Bronx, according to a Taconic press release in March.

All of these recent purchases are making rent-stabilized residents in the Bronx anxious about their future.

“Because I have been here so long, my rent isn’t high, so I am sure they are going to try and raise it,” said Ruth Pleasant, a 30-year resident of 1565 Townsend Ave. Pleasant claims she has been forced to boil water every morning because hot water is not available until later in the day. But she has little choice. “I really can’t afford to live anywhere else.”