This week The New York Times chronicled the hubris of Dawnay Day, a high-flying UK real estate investment firm that swooped into the U.S. with big plans to turn shabby apartment buildings into upscale pads with rents to match. (The piece is a swan song for Times real estate reporter Christine Haughney, who was just laid off.)
Dawnay Day is now in tatters, its principals' yachts and art collections in the process of liquidation. The firm spent $225 million on 47 buildings containing fewer than 1,200 apartments, mostly in New York City's East Harlem. Not that the company put up much money of its own, though -- Morgan Stanley raised most of it from mortgage-backed securities investors, represented by Bank of New York Mellon (whose headquarters are pictured). This fall, the investment trust filed for foreclosure, less than three years after Dawnay Day bought the buildings. Tenants in the building complain their worst of both worlds – crummy conditions, but fees piled on to their rent bills for repairs.
If you rent in an apartment building, this fate, alas, may be yours too. More than 100,000 apartments in New York City alone were bought in recent years by landlords looking to significantly jack up rents, according to a recent report.
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