PIMCO Sells Rent-stabilized Loan Book at Deep Discount

One of the big buyers to emerge for rent-stabilized multifamily has started snapping up the declining asset class’s debt, too — so long as the discount is deep enough.

Peter Hungerford’s PH Realty in partnership with Rockledge picked up $61 million in loans held by PIMCO and backed by a portfolio of six Bronx apartment buildings, PincusCo first reported.

The private lender let them go for the rock-bottom price of $28 million. That’s 45 cents on the dollar.

A spokesperson for PIMCO did not immediately respond to a request for comment.

The 442-unit portfolio is 100 percent rent-stabilized, Hungerford said, meaning it has been battered by the 2019 rent law’s de facto cap on revenues. In the same period, the buildings’ owners weathered a run-up in insurance costs, then interest rates, and ultimately, stopped paying debt service.

For Hungerford and Rockledge, co-founded by David Kaye and Joe Listhaus, the strategy is loan-to-own.

“If we don’t make deals with the borrowers directly, we’ll eventually foreclose on them and take over the apartment buildings,” Hungerford said.

The partners are among a niche group of New York investors scouting for rent-regulated deals.

PH Realty and Rockledge, in conjunction with Alma Realty, made a splash last year when they scooped up a $180 million portfolio of 1,300 units — many of them rent-stabilized — from veteran multifamily investor Sentinel Real Estate. The sale worked out to a 40 percent discount from what Sentinel paid between 2013 and 2019.

Recently, lenders have joined the buyers clambering to unwind themself from the asset class.

Flagstar Financial, formerly New York Community Bank, started shopping $343 million in rent-regulated loans in December after its exposure to the asset class drove a nightmarish 2024.

The bank nearly failed after slashing its dividend early last year and disclosing internal controls issues. Since, it’s worked to prune its rent-stabilized loan book amid rumblings that many of those deals are underwater.

Last month, Flagstar unloaded a mix of $142 million performing and non-performing rent-regulated loans to Howard Lutnick’s Cantor Fitzgerald. It’s unclear what the firm paid for the package.

Hungerford said he has bid on Flagstar deals, but hasn’t bought anything — yet. He assumes his bids were too low.

“When I look at a defaulted loan I get laser-focused on what the real estate is worth and then I’ll bid something under that,” Hungerford said.

“But NYCB and I should do some business together,” he added. “There are properties I would like to own.”

As for the Bronx buildings, which include 1187-1197 Anderson Avenue, 1220 Shakespeare Avenue and 1230 Woodycrest Avenue in Highbridge; 1220 Westchester Avenue in Soundview; and 983 East 181st Street in West View — Hungerford’s game plan is simple: clear violations and collect rent on a fully occupied portfolio.

“Same shit; different day,” he said.