Distress Spreads in Multifamily Market: NYC Rent-Stabilized Portfolio, Dallas Property Face Servicing Transfers
This analysis is based on reporting originally published by Multifamily Dive. For comprehensive daily coverage of the multifamily industry, subscribe to the free Multifamily Dive newsletter.
Two significant multifamily properties in New York and Texas have been transferred to special servicing this month, signaling deepening financial distress tied to localized regulatory and economic pressures.
In the Bronx, the Singer Multifamily Portfolio—a collection of five rent-stabilized buildings containing 291 units—has been moved to special servicing due to payment default, according to a recent Morningstar Credit report. The transfer follows several months of delinquency. While late-2024 financials appeared stable, servicer notes flagged mounting issues including force-placed insurance, delinquent property taxes, and poor physical conditions at two of the buildings.
The portfolio is linked to Barry Singer, previously cited by Crain’s New York Business as one of the city's worst landlords. The move underscores a persistent crisis in New York's rent-stabilized sector, which advocates say has been crippled by the 2019 Housing Stability and Tenant Protection Act (HSTPA).
"The 2019 rent laws were touted as a solution for affordability," said Jay Martin, executive vice president of the New York Apartment Association. "Instead, they've accelerated the decay of stabilized housing while market-rate rents have soared."
Morningstar's report connects the Singer case to a wider trend, noting that the HSTPA, combined with high inflation and operating costs that outpace allowable rent increases, has "critically impaired" the value of rent-stabilized assets over the past five years. This environment has triggered other major defaults, including Emerald Equity Group's 28-property portfolio and Pinnacle Group's recent bankruptcy sale.
Meanwhile, in Richardson, Texas, the 262-unit Riley apartment complex has also entered special servicing. Completed in 2016, the property participated in the Garland Housing Finance Corporation (HFC) program, which grants real estate tax exemptions subject to strict affordability conditions. Morningstar suggests a "cash trap" may have been triggered, potentially due to a loss of that exemption—a move that could slash the property's appraised value from $83.1 million to $65.6 million.
The situation in Texas reflects growing scrutiny of "traveling" HFCs, which partner with developers to secure tax breaks outside their home jurisdictions. Although the state enacted House Bill 21 last year to reform affordable housing tax exemptions, the law faces a legal challenge from developers who argue it will displace working-class residents.
Beyond HFC issues, Texas's multifamily market is grappling with rising borrowing, insurance, and tax costs. Last week, operational control of ten troubled Houston properties totaling over 3,600 units was handed over to a new management group, indicating that financial stress is spreading.
Voices from the Industry
Michael Chen, Portfolio Manager at a Dallas-based REIT: "These servicing transfers are canaries in the coal mine. The underlying issue is a mismatch between policy, operating costs, and revenue. In Texas, the HFC model was innovative but ripe for complication. Regulatory clarity is needed, or more assets will tip over."
Rebecca Shaw, Affordable Housing Advocate in NYC: "Seeing a landlord with Singer's history default is no surprise, but it's tenants who suffer from deferred maintenance and uncertainty. The 2019 laws were meant to protect tenants, not bankrupt buildings. We need targeted public investment to preserve this stock, not just regulatory pressure."
David K. Miller, Real Estate Analyst (Blogger: 'The Mortgage Minute'): "This is a spectacular failure of policy. New York's rent laws are economically illiterate, strangling landlords while pretending to help tenants. And Texas's HFC mess? A classic case of a good incentive warped by loopholes. Investors are right to be furious—these aren't market failures, they're government-made disasters."
Linda Garcia, Property Manager in Houston: "On the ground, it's a perfect storm. Insurance premiums have doubled, taxes are up, and wages haven't kept pace. We're doing everything to keep rents reasonable, but the math is getting impossible. The Riley's situation is a warning for any property relying on a delicate tax arrangement."
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