Multifamily in Harlem Nears Default

With 1,230 rent-controlled units in the development, this marks one of the largest failures of a NYC housing development.

By: Henry Berkowitz

In a surprising turn of events, a Harlem development, the Riverton Apartments, has announced that it anticipates defaulting on the property's $225 million mortgage by early next month. With 1,230 rent-controlled units in the development, this marks one of the largest failures of a NYC housing development.

Rockpoint Group, LLC has informed the mortgage servicer that it will more than likely be defaulting on the mortgage, since they have made very little progress toward their conversion goals. They had planned on converting half of the complex's apartments out of the rent controlled column, and back to market rate. The company obtained the mortgage in 2006. According to one of the spokesmen for Trepp, LLC, a data service that tracks such numbers, "It's surprising that you'd have a New York City multifamily [default] happening so quickly,"

The Riverton mortgage, like many large commercial loans, has been sold off to several different differnet investment groups. Most investment groups have ceased purchasing such bonds since the onset of the housing decline, which began in earnest last summer. While most of the defaults have occurred in Florida and California, the market in NYC has so far been seemingly immune to the precipitous declines. Many analysts worry that this is only the first of several major developments that will come into default in the coming months. There has been no official word from the developer about their plans to stave off foreclosure.