Improved Assets Mean Improved Community: Harlem Multifamily Owner
- Apr 01, 2011
New York–In the wake of the U.S. Department of Housing and Urban Development’s selection last week of the first 17 communities to receive planning grants through the new Choice Neighborhoods Initiative, whose goal is to transform areas of concentrated poverty into mixed-income neighborhoods, private multifamily owners are eager to point out how their own investments in multifamily properties can improve neighborhoods. Not just a subjective improvement, either, but improvements in quality-of-life scores as calculated by HUD’s Real Estate Assessment Center (REAC).
For example, the privately owned Tahl Propp Equities (TPE) acquired an East Harlem multifamily portfolio four years ago that now represents an investment exceeding $100 million, counting not only acquisition costs but also capital improvement costs to the buildings. With that capital improvement, the company managed to increase the portfolio’s REAC scores by a considerable amount.
Ratings that had been unacceptably low when the firm acquired the portfolio in 2007–many down in the 50s and some as low as 41–are now averaging 85, with six buildings scoring between 93 and 95. The ratings reflect current code compliance and past violations that have been cured, and in addition to these kinds of infrastructure criteria, REAC also addresses quality-of-life repairs, including lighting and painting of common areas.
The portfolio TPE purchased also included a management division, Manhattan North Management Co. Inc. TPE evaluated the performance of the division, retrained where required and eventually expanded the staff to include 130 employees, many of whom are residents of the community. The company also sought out local businesses, suppliers and vendors for work at the East Harlem residences.
Further, the company’s efforts included not just the physical plant of the buildings, but also efforts to improve the surrounding community. TPE contributed funds to such organizations as the Harlem Academy, which was able expand its student population partially through TPE donations of over $320,000. Last September, TPE also donated 1,000 fully supplied backpacks valued at $30,000 to residents’ student-aged children and various community organizations. In addition, the firm has helped bring family support services to the area, such as the Sunshine Day Care Center.
TPE expects Harlem residents to benefit from its efforts, but also expects its portfolio valuation to benefit as well. “Early on, we made a commitment to maintain affordable, low and moderate income housing in Harlem,” points out Joseph A. Tahl, President of TPE, in a statement. “Our mission was to enhance the quality of life of thousands of residents, while increasing value in the assets.”