Tenants, our non-eviction condo-conversion plan has a great insider price for you — only first, you’re evicted!
That’s the paradoxical plight of hundreds of residents at 22 River Terrace in Battery Park City, a 324-apartment, riverfront tower that New York-based Centurion Real Estate Partners plans to convert to luxury condos.
Not only will most tenants not have the chance to buy their homes at a discount — for example, $1.76 million as an insider for Apt. 16D versus $2.07 million to an outsider — they can’t stay as renters, either.
Since tenants received a “red herring” in January, Centurion has refused to renew leases and has exercised an option to cancel others.
Some tenants call it “illegal warehousing.”
But in fact, an obscure and controversial court ruling a few years ago allows a converter to deny market-rate tenants new leases during the time between the “red herring” filing and its approval by the attorney general.
That typical 120-to-180-day process gives the sponsor a four-to-six-month window in which to legally clean house.
Centurion also canceled leases signed in late 2013 that included a 90-day cancellation rider — that’s legal, too — inserted by previous landlord Rockrose, which sold the building’s ground lease to Centurion in December for $265 million.
Rent-stabilized tenants can’t be denied lease renewals. But 27-story 22 River Terrace, opened in 2001, is a rare, 100 percent market-rate property because it was built without tax abatements or other subsidies.
“It is a little unique in that there are very few [other] pure-market rentals and being converted to condominiums,” said Deborah Riegel, a lawyer at Rosenberg & Estis, who represents Centurion at 22 River Terrace.
A relative few tenants are fortunate to have leases that don’t expire until 2015, and which began before the cancellation riders were added to new leases.
But, tenants howl, Centurion “misled” them with a “non-eviction” plan that proved to be meaningless. One called it “a complete work of fiction, listing apartments that don’t or won’t exist.”
Centurion clearly aims to reduce the current 324 units to an unspecified smaller number of larger, more luxurious ones. While the red herring lists 15 units on the third floor, for example, all interior partitions on that now-vacant floor have already been demolished.
Designers CetraRuddy, the team behind the Walker Tower conversion, where units have sold for $50 million, are said to have been tapped for 22 River Terrace.
Centurion principal John Tashjian refused to say how many units would be emptied. He said through a spokesperson only that 22 River Terrace was over 90 percent occupied in December and is “approximately 75 percent occupied” now.
He wouldn’t “speculate on future occupancy level, which is, in part, tied to the timing of the [AG’s] review and comments on our initial submission.”
Nor would Tashjian say how many fewer units the reconfigured building would have: “It’s too early to estimate, but we will take advantage of combination opportunities when practical and available.”
Meanwhile, the forced exodus is on. Evacuees reflect a diverse cross-section of Manhattan — among them, public school teacher Kim Landesman, prominent gastroenterologist Dr. David Robbins and New York Post Page Six editor Emily Smith.
When Landesman signed a one-year lease last April for herself, her husband and infant child, “we never thought we’d be moving so soon,” she said.
“This building has been a thriving community of families, and now it’s going to become a place for investment money,” Landesman predicted.
The upheaval occurs amidst a condo-conversion frenzy. Despite the boom in super-luxury towers, there’s a scarcity of midrange product.
“The bottom 90 percent of the market is tighter than the top 10 percent,” said Miller Samuel consulting guru Jonathan Miller.
Halstead Property estimates that about 25 rental buildings citywide, not including 22 River Terrace, are converting to condos — a total of more than 1,200 apartments. Many more rental properties are for sale and will likely be converted in the next year or two.
Tashjian says he’s gone the extra mile to help tenants, offering short-term leasing extensions to some, and granting early expirations to others who wished to leave before current leases are up.