Former New York Mets slugger Mo Vaughn played in Queens but plans to rescue 14 apartment buildings in the Bronx.
On Wednesday, December 2, Mayor Michael Bloomberg and Fannie Mae announced that Omni New York LLC, led by Vaughn, would buy the mortgage debt on a portfolio of Bronx properties owned by entities of Ocelot Capital Group.
Gladys Archer is tenant association president at 806-808 E. 175th Street, an Ocelot apartment building north of Crotona Park. Archer remembers Vaughn from television.
“News to me,” she replied when informed of Omni’s bid.
In 2006 and 2007, Ocelot, a New York-Tel Aviv real estate investment firm, backed by a $29 million Deutsche Bank loan later sold to Fannie Mae, gobbled up 25 buildings in low-income Bronx neighborhoods.
In 2008, the housing market crashed and Ocelot neglected its properties and hundreds of tenants, Bloomberg said. In late 2008, Ocelot prepared to sell its Bronx portfolio to Vintage LLC, another real estate investment firm, but the deal appeared to collapse when Ocelot entities defaulted on mortgages and 14 of the buildings fell into foreclosure.
Rather than sell the buildings to another irresponsible landlord, the city Department of Housing Preservation and Development (HPD), Fannie Mae and Deutsche Bank worked to find a buyer loyal to tenants. Vaughn is set to buy $23.8 million in debt linked to the 14 buildings from Fannie Mae and Deutsche Bank at a discount. Omni has promised to invest up to $1 million for emergency repairs and hopes to own the properties outright when the foreclosures are complete.
Elected officials blasted Fannie Mae in July when it prepared to sell the mortgage debt via an online auction. Instead, Omni will bail out the mortgage giant.
“The sale of these buildings to an affordable housing developer with a track record as strong as Omni’s is a home run,” Bloomberg said. “We’re confident that Mo Vaughn and Omni will do right by the residents.”
Lawyers from the Urban Justice Center helped tenants at 806-808 E. 175th Street wrest control of the dilapidated building from Ocelot and would-be buyer Vintage LLC months ago. They persuaded a judge to appoint New City View Development, a non-profit building management firm, to collect rent and repair apartments. In late 2008, Ocelot had failed to fix more than 296 hazardous violations at the property – leaking water pipes, peeling paint and busted emergency lights.
Initially, Archer was ecstatic about the change. But New City View Development executive director Rafael Lara has made only modest headway; many tenants owe back rent from when Ocelot neglected the building, Archer said. The feisty grandmother to 806-808 E. 175th Street won’t applaud Vaughn until she sees results.
“I need to look at [Omni’s] background,” Archer said. “[Landlords] come in and promise and polish. Then the building gets bad again.”
U.S. Senator Chuck Schumer and Congressman Jose Serrano helped stop the online auction. HPD and Fannie Mae brokered the 416-apartment deal. Omni partners with neighborhood groups to offer social services such as after-school programs and job training, city officials stated. Since December 2004, it has acquired and rehabbed or begun to rehab 2,937 affordable apartments in New York.
Real estate investor Sam Suzuki may or may not have signed a contract to buy the deeds to the 14 buildings prior to Omni’s bid.
Reach reporter Daniel Beekman at 718 742-3383 or dbeekman@cnglocal.com
