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Rent-stabilized buildings hit auction block, despite Mamdani’s efforts to intervene
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David Brand
Published Nov 10, 2026 at 6:00 a.m. ET
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Ed Reed/Mayoral Photography Office
By
David Brand
Published Nov 10, 2026 at 6:00 a.m. ET
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Mayor Zohran Mamdani’s effort to steer the sale of crumbling apartment buildings to tenant-approved owners has suffered another setback. Dozens of deteriorating properties in East Harlem that City Hall tried to deliver into the hands of an affordable housing developer are instead heading to the auction block in Manhattan starting Tuesday afternoon.
Mamdani administration officials had supported a bid by the firm Spatial Equity to purchase the 38-building portfolio before its lenders auctioned it off. The properties were previously owned by bankrupt real estate investment firm Emerald Equities Group and contain a combined 850 mostly rent-stabilized apartments.
But tenants and attorneys involved in the potential deal say negotiations fell through, and the banks and other financial institutions that control roughly $250 million in mortgage loans will proceed with foreclosure sales for each individual building over the course of three auction days.
Cara Polte, a resident of one of the buildings on East 103rd Street and the co-founder of the East Harlem Tenant Union, said tenants will continue advocating for a new buyer committed to resolving thousands of housing code violations that have plagued the buildings for decades,
“We’re definitely not stopping,” Polte said. “But this obscures the pathway a little.”
Mayor's Office to Protect Tenants Director Cea Weaver said the foreclosure sale isn't the end of the city's effort to force owners to improve conditions in the building.
"The Mayor's Office is proud to support the tenants of the East Harlem Tenants Union as they organize for better living conditions and more control over the future of their homes," Weaver said in a written statement.
Mayor Zohran Mamdani toured a deteriorated East Harlem property previously owned by Emerald Equities in March shortly after a retaining wall behind the building collapsed.
Ed Reed/Mayoral Photography Office
The stalled negotiations mark a new obstacle to the Mamdani administration's efforts to influence transactions involving financially distressed and derelict buildings – a priority he described on his first day in office.
Hours after his inauguration, Mamdani announced that he had directed city lawyers to attempt to block an unrelated bankruptcy sale of nearly 5,000 rent-stabilized apartments. That unprecedented intervention ultimately failed to stop the transaction, but it did help compel the new buyer to commit to resolving hundreds of outstanding violations in the buildings.
Mamdani has also championed other policies meant to help nonprofits and some private developers acquire buildings, including a measure known as the Community Opportunity to Purchase Act that would give some groups a head start on buying financially distressed properties before they hit the open market. His predecessor, Mayor Eric Adams, vetoed a previous version of the legislation before the City Council approved a revised measure last month.
Polte said the auction complicates the tenants’ goal of turning her building and four others along East 103rd Street into a “community land trust” – a form of nonprofit ownership that gives tenant groups power over housing decisions or allows residents to purchase their units at permanently affordable rates.
“I don't think anyone has a clear vision about what comes next because the lender was not willing to play ball with negotiations,” Polte said.
Spatial Equity had attempted to purchase the buildings but had its initial $68 million bid – roughly a quarter of the debt – for the portfolio rejected, City Limits reported in July.
Polte said the lenders also rejected a $110 million offer from Spatial Equity last month and have not communicated about the amount they would accept.
“It’s been difficult to try to negotiate or even hear what would get them to say yes,” she said.
The mortgage loans are controlled by a trust managed by a variety of banks, as well as the lender Sabal Investment Holdings. The loans were partially insured by Freddie Mac.
Sabal executives did not respond to requests for comment on Monday.
Spatial Equity principal Teg Sethi declined to comment on the failed purchase.
Roughly 1,600 buildings with rent-stabilized apartments are facing financial distress, meaning their expenses outpace revenue from rent, according to data published by the city’s Rent Guidelines Board earlier this year. Landlord groups say sharp restrictions on rental increases, exacerbated by the board’s recent two-year rent freeze, have made ownership untenable and have warned of a dramatic rise in foreclosures.
Tenant advocates counter that many property owners facing financial problems, like Emerald Equities, took on too much debt with a plan to pay it back by raising rents before new laws limited their ability to do so.
The East Harlem efforts hint at the complexity of housing deals that involve those rent-regulated buildings now at risk of foreclosure.
“These things are very complicated,” said David Lebenstein, an executive managing director specializing in nonprofit purchases at Cushman & Wakefield. “Every deal has to be analyzed given the cash flow, the rent rolls and the occupancy levels.”
Lebenstein said lenders of rent-stabilized apartment buildings are often willing to wipe away debt if it means salvaging some value.
“They recognize they’re underwater,” he said. “If they’re owed $100 million and they get $70 million, that’s a victory.”
That does not appear to be the case with the former Emerald portfolio.
The upcoming foreclosure auction is the latest twist in the tangled history of the East Harlem apartment buildings.
Emerald Equities acquired the 38 buildings for $350 million in 2016 and began raising rents on the stabilized apartments to increase the company’s revenue and pay off its debts – a strategy allowed by state law at the time and common in gentrifying sections of the city.
Emerald took out another $180 million loan on the buildings in December 2018, just six months before state lawmakers passed a package of tenant protection measures that outlawed many of the tactics Emerald used to increase rents.
Lenders foreclosed on the properties in 2024, and Emerald filed for bankruptcy a year later. An investigation by the New York Attorney General’s Office and the state’s Division of Homes and Community Renewal found the company had also illegally lifted 21 apartments out of the rent stabilization system.
A previous owner, British investment firm Dawnay Day Group, had pursued a similar strategy for deregulating apartments and raising rents nearly a decade earlier before it too declared bankruptcy in 2009.
The procession of owners has left the buildings in disrepair. A retaining wall collapsed in the rear of buildings on East 103rd St. earlier this year, days before Mamdani and Cea Weaver, the head of his tenant protection office, visited to meet with tenants in March.
When Gothamist toured the buildings in April, a single boiler serviced three of the properties and one first-floor tenant covered a gaping hole in his kitchen with rotting plywood.
Attorney Matthew Latterner said conditions have only worsened for renters. He said he and tenants “appreciate that the Mamdani administration is intervening,” even if the efforts have so far failed to influence the lenders.
He said he would immediately sue whoever takes over the buildings following the foreclosure sales to demand they improve conditions at buildings that totaled more than 2,300 housing code violations in April.
“Our number one priority has been to fight for these tenants and we’re going to keep doing that no matter who the owner of the buildings are,” Latterner said. “Whoever the new owners are, we’re prepared to sue the living bejeezus out of them on day one to make sure tenants get the repairs they need and keep their families safe.”
Tagged
Zohran Mamdani
housing
new york city
David Brand
David is a reporter covering housing for Gothamist and WNYC. Got a tip? Email [email protected] or Signal 908-310-3960.
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