- PIMCO sold a $61M portfolio of rent-stabilized loans for just $28M, a steep 45% discount.
- The portfolio, consisting of 442 units in Bronx apartment buildings, is 100% rent-stabilized and faced many struggles due to rent laws, rising insurance, and high interest rates.
- Investors PH Realty and Rockledge, using a loan-to-own strategy, aim to acquire the properties through foreclosure if direct deals with borrowers fail.
- The sale highlights a growing trend where lenders are offloading troubled rent-regulated loans at deep discounts due to mounting financial challenges.
PIMCO made headlines by selling off a rent-stabilized loan book at a steep discount, revealing the ongoing struggles in NYC’s multifamily market, especially within the rent-regulated sector.
The buyer, PH Realty, in partnership with Rockledge, acquired a portfolio of Bronx apartment buildings valued at $61M for just $28M—an eye-catching 45% markdown, as reported by The Real Deal.
The sale is part of a broader shift in the market as investors look to capitalize on distressed assets, particularly in the wake of New York’s recent rent stabilization laws and rising operational costs.
The Bronx Portfolio
The portfolio consists of six rent-stabilized apartment buildings across the Bronx, totaling 442 units.
The buildings have struggled financially due to a combination of factors, including New York’s 2019 rent laws (which capped potential revenue hikes for landlords), rising insurance costs, and higher interest rates. The owners eventually stopped paying debt service, leading to the default.
For PH Realty and Rockledge, the deal represents a classic “loan-to-own” strategy, where the investors acquire distressed loans at a steep discount with the intention of foreclosing on the properties if direct negotiations with the borrowers fail.
Peter Hungerford, head of PH Realty, has been vocal about his approach to distressed loans. When placing bids, he focuses on the underlying property value.
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Offloading Debts
The Bronx portfolio deal is part of a broader trend where lenders are distancing themselves from the rent-regulated sector, which has become more burdensome.
Flagstar Financial (FLG), previously New York Community Bank, started selling off $343M in rent-regulated loans last December after struggling with its exposure to this asset class. Flagstar’s difficulties in 2024 included a near-collapse, prompting the sale of performing and non-performing rent-regulated loans.
Last month, Flagstar also sold a mixed portfolio of $142M worth of rent-regulated loans to Cantor Fitzgerald, although the sale price remains undisclosed. Hungerford’s firm, PH Realty, also bid on some of Flagstar’s distressed loans but hasn’t closed any deals yet, indicating stiff competition.
Looking Ahead
The sale of PIMCO’s rent-stabilized loan portfolio at a steep discount underscores the ongoing challenges facing New York’s multifamily market, particularly for rent-regulated properties.
With the rent-regulated buildings already facing financial strain, Hungerford’s plan is straightforward: address code violations and maximize rent collection on a fully occupied portfolio.
As more lenders offload troubled rent-regulated loans, this trend is likely to continue, with savvy investors eyeing potential opportunities in a still-strained sector.
