High Roller Steven Roth Buys Into Some Bad Karma
The Wall Street Journal reported Friday that real-estate mogul Steven Roth recently bought Bernie Madoff's beach house for $9.41 million.
That's some negative karma Roth is buying into. But the real-estate mogul is less known for his involvement in another business venture with even worse juju.
Roth is the chairman of Vornado Realty, one of the largest owners of commercial real estate in the city. But he's also connected to a group of foreclosed and crumbling residential properties in the Bronx.
Vornado recently bought up a 26 percent interest in the debt-ridden LNR Properties. The struggling Miami company needed a cash infusion, and Vornado came to the rescue in July.
Now Vornado has inherited a swath of properties that the city's housing commissioner last week described as in a state of "shocking" disrepair -- some of the worst he has seen in his 21 year career. LNR has taken a lot of flak from local public officials, housing advocates, and even a judge recently for neglecting the properties, which at one time were owned by Milbank Realty -- whose owners we named as some of the worst landlords in New York this past March.
When Milbank foreclosed on the properties, which were tied up in mortgage-backed securities, LNR obtained them. A few months later, the judge-appointed administrator of the ten-building portfolio complained to the court that LNR wasn't putting in enough money to cover their operating costs. The buildings were slipping into further disrepair. The tenants sued, and a State Supreme Court judge recently attempted to reverse the damage by demanding that LNR cough up $2.5 million more dollars for repairs. LNR is appealing the decision, while city housing officials, advocates, and politicians like Christine Quinn are vowing to put pressure on whoever gets involved with the properties to sell them to a responsible buyer.
Now that Vornado in the game, Roth should be expecting a call from Quinn sometime soon. What remains to be seen is whether this pressure makes a difference in terms of how these properties actually fare or who LNR ultimately selects as a buyer.