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He says that he knew the buildings had problems and that he was certain SG2's officials were aware of them. "These people aren't average shmucks, like me," he says. "These are brilliant people. Mr. BlackRock was on top of the world, and they thought the market would just go up. . . . From the running of the properties themselves, you can't get rich."
At one point, Selechnik owned nearly 7,000 buildings. Now he claims to own fewer than 50.
He says he's disheartened to learn that the condition of some of his buildings might have worsened, at least according to some accounts. "I loved those buildings!" he says. "I'm walking around like I'm missing an arm." His cell phone rings, and he proceeds to have a conversation in very good Spanish. After hanging up, he doesn't a miss a beat in his reverie about 2320 Aqueduct: "That building should be a shining star in their portfolio!"
Even with the whores in the utility closet or on the radiator. "Prostitution is a nice business compared to some others," he says. "At least they don't break the locks on the doors! There have to be some apartments—you'd be naïve to think that some don't have that setup."
Owning a big cluster of such buildings, he adds, is difficult. "It's tremendous work to keep up this portfolio of properties," he says. "So maybe if they had a little less, they could keep them in better condition. Just the basic costs of keeping them running—a big problem." In February 2007, he notes, heating oil cost more than $3 a barrel. "Now, it's gone down again," he says. "How big of a difference does that make? How about the difference between going broke and being in business?!"
To demonstrate, he picks up a piece of paper from his desk. On the paper is a typed list of oil prices for November. "You see?" He launches into a monologue about what it takes to run a building, about the difference between fixed costs (insurance) and variable costs (taxes, water, sewer, and oil).
He claims that he made a huge effort to reduce the violations in his buildings, paring some of them down to near zero. "One or two violations for a single building! I'm the cleanest baby in the lot!"
Signing off after his interview, he shouts, "Come back anytime!"
Stephen B. Siegel's office is on a different subway line in a different world. He conducts business from the headquarters of CB Richard Ellis, in a corner office on the 19th floor of the MetLife Building, above Grand Central Station. No kitchen cabinets here. He has a collection of antique elephants—trunks up, for good luck. Recalling the Bronx deal for Selechnik's buildings, he shakes his head and says, "There were so many violations. He had some of the best buildings, the best blocks. We had to secure them from a security perspective. There are convicted felons, deadbeats. We put on a night watch. We patrol some of them. We make it as secure as we can."
He doesn't go into details but insists there's no way to repair things more quickly. "Everything takes time," he says. "You can't take a battleship out to sea in a day."
Siegel grew up in the Bronx and has warm memories of selling soda and encyclopedias as a youngster: "When I was growing up, the Grand Concourse was where you aspired to live!" he says. "They are nice buildings, and I now know how nice they are, because I own them."
Back to the future: Initially, he says, SG2 and BlackRock committed $20 million to capital improvements—not enough for, say, a Manhattan-style renovation. "The money goes a long way," he says, but "it's an ongoing job. You spend $20 million, and then the things you bought four years ago you need to replace. Some of the ones we bought were distressed, and now, no matter what we do, they get distressed again."
According to the city's property records, Siegel paid just under $90,000 per unit—he bought about 4,000 units in the Selechnik deal. When the city analyzed nearby properties at the time of the deal, it deemed that too high a price—a price one might pay if one expects to, say, flip the properties or convert them to market rate. But Siegel insists that he didn't buy them to flip them. His strategy, he says, was to keep them affordable. "People have to live somewhere they can afford," he says.
Within four months, he says, SG2 was able to get three buildings off the city's violations list, and the city responded with a gushing letter of thanks. Siegel denies that 2320 Aqueduct was on the list at all. "I heard that," he says. "That must be wrong."
It's possible that SG2 inherited all of the problems with that particular madhouse—though the building didn't show up on the city's worst-buildings list the prior year, when it was still owned by Selechnik. In any case, since SG2 took over the 110 Bronx buildings, the company has been hit by several lawsuits regarding three of the buildings. Siegel says that lawsuits are par for the course and that activists for the tenants are trying to rile people up.