38 rent-stabilized East Harlem buildings go to foreclosure auction after City Hall's preferred deal falls apart

Dozens of crumbling, mostly rent-stabilized apartment buildings in East Harlem are going to the auction block, after Mayor Zohran Mamdani's administration failed to steer them to a buyer that tenants had approved. Foreclosure sales of the 38-building portfolio, once owned by the bankrupt investor Emerald Equities Group, begin Tuesday afternoon, Nov. 10, and run over three auction days, Gothamist reported.

The buildings hold about 850 apartments. City Limits, which first reported City Hall's role in July, put the count at 887 rent-stabilized units.

What fell through

City officials had supported a bid by Spatial Equity, a developer of affordable and supportive housing, to buy the whole portfolio before the lenders sold it off, The Real Deal and City Limits reported over the summer. Creditors turned down Spatial Equity's first offer, about $68 million, as too low. According to Cara Polte, co-founder of the East Harlem Tenant Union, the lenders also rejected a $110 million offer last month and never said what price they would accept, Gothamist reported.

The mortgage loans, roughly $250 million, are controlled by a trust run by several banks and the lender Sabal Investment Holdings, and were partly insured by Freddie Mac. Rather than take a discount, the lenders are going ahead with a separate foreclosure sale for each building.

What's being sold

• Tuesday, 2:15 p.m.: court sale notices summarized by The American Developer, a real estate news site, list five East Harlem buildings with 150 apartments for a referee auction at the New York County Courthouse, on judgments totaling about $30.6 million: 411 E. 118th St., 204 E. 112th St., 2371 Second Ave., 122 E. 103rd St. and 233 E. 111th St.
• Nov. 17, 2:15 p.m.: three more, 102 E. 103rd St., 124 E. 103rd St. and 291 Pleasant Ave., are set for auction at 60 Centre St. on about $17.2 million in judgments, the same site reported.

Auctions can still be adjourned, settled or canceled before the gavel falls.

Why the buildings are in this state

Emerald bought the 38 buildings for $350 million in 2016 and raised rents on stabilized units to pay its debts, a strategy state law allowed at the time, then took out another $180 million loan in December 2018, months before Albany's 2019 tenant protection laws outlawed many of those tactics, Gothamist reported. Lenders foreclosed in 2024 and Emerald filed for bankruptcy a year later. A state investigation found it had illegally taken 21 apartments out of rent stabilization.

Conditions have been grim. A retaining wall collapsed behind buildings on East 103rd Street earlier this year, days before Mamdani toured them in March. The 38 buildings had 2,342 housing code violations as of April 3, according to a Gothamist analysis cited by The Real Deal.

What tenants and the city say now

• Tenants in five buildings on East 103rd Street want to turn them into a community land trust run with El Barrio Community Land Trust. Polte told Gothamist the auction "obscures the pathway a little," but said, "We're definitely not stopping."
• Cea Weaver, director of the Mayor's Office to Protect Tenants, said in a statement that the office will keep supporting the tenant union as it organizes for better conditions.
• Tenants' attorney Matthew Latterner said he will sue whoever takes over the buildings to demand repairs.

The case is a test of Mamdani's push to move distressed buildings to better owners. About 1,600 buildings with rent-stabilized apartments are financially distressed, according to Rent Guidelines Board data cited by Gothamist. Landlord groups blame rent limits and the two-year rent freeze; tenant advocates say owners like Emerald borrowed too much.