Wednesday, January 21, 2009

Infamous SF Landlord Takes A Hit: Gives Bank 51 of Its Buildings to Avoid Foreclosure

For all of those who have stood up to the abusive tactics of one notorious San Francisco landlord, there is a measure of satisfaction in the news that the CitiApartments/Skyline conglomerate has been forced to give up 51 of its buildings.

The San Francisco Business Times reports that San Francisco's second biggest landlord has deeded 51 buildings back to its lender (UBS bank) rather than face foreclosure, giving up ownership of an estimated 1500 apartments in San Francisco. From what we hear, this may be just the tip of the iceberg.

Tenant advocates have warned for years that CitiApartments and its related entities are engaged in a nasty type of predatory equity -- overpaying for apartment buildings with the plan to force out low-rent tenants and replace them with high-rent tenants. Lembi's entities have faced numerous lawsuits for harassment and other abusive tactics, including a lawsuit brought by San Francisco's city attorney who commented that "the facts revealed by my office's investigation demonstrate very clearly that the owners of Skyline Realty and CitiApartments made a calculated business decision to operate in violation of the law -- and to do so consistently."

Apparently the business model of overpaying for apartment buildings on the assumption that you can bully rent-controlled tenants out of their homes and get higher rents isn't such a winning strategy after all.

Unfortunately for tenants of these buildings, CitiApartments will continue managing the buildings. It remains to be seen whether the tenants' situation will improve or get worse under CitiApartments' management when the company no longer owns the buildings. Bank owners are not know for being good landlords, as tenants in foreclosed properties across the state know. So tenants in these buildings may find themselves going out of the frying pan and into the fire.

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