A spokesman for Rose Associates could not confirm whether theRiverton assignment was a permanent one or an interim one, as isthe case with Stuy-Town. There, CWCapital and a joint venture ledby Tishman Speyer Properties and BlackRock Realty hired Rose astransition consultant when the JV handed over the keys to the80-acre complex after defaulting on a $3-billion senior mortgage.In that instance, Rose had managed Stuy-Town before, under the11,200-unit complex's previous ownership by MetLife.

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As with Stuy-Town, MetLife developed Riverton in the late 1940s.Rose Associates will be responsible for the day-to-day managementand maintenance of Riverton.

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In a statement, Jeffrey Heifetz, managing director with Rose,says his company is "currently in the process of evaluatingservices at the property and identifying ways to enhance residentsatisfaction. We look forward to maintaining a dialogue withresidents and community leaders." Rose currently manages more than25,000 residential units citywide.

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A partnership of the Rockpoint Group and Stellar Management hadbought the 1,230-unit Riverton complex in 2005 for $135 million.They refinanced the property a year later with a $225-million firstmortgage and a $25-million loan, intending to convert more thanhalf the rent-controlled units to market-rate rents.

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However, in a parallel with the Stuy-Town complex, the pace ofconversion at Riverton was slower than expected, reportedlyreaching only 10% of the rent-controlled units by the summer of2008, and Riverton's ownership defaulted on the debt in early 2009.The complex was carrying $240.6 million in debt, and Fitch Ratingssaid at the time that its value had fallen to $196 million.Similarly, Fitch said that Stuy-Town's value had declined toone-third the $5.4 billion that its owners had paid in 2006.

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Following the default, special servicer CWCapital filed forforeclosure and receivership in February '09, according to Fitch.In early February of this year, Justice Richard Braun of ManhattanState Supreme Court ordered the property to be sold in aforeclosure auction.

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In reporting Braun's order to sell the Riverton complex, theNew York Times quoted Harold Shultz, senior fellow at theCitizens Housing and Planning Council, as predicting an imminent"wave of foreclosure sales throughout New York City. This is thefirst. For tenants, there's good news and bad news. Excessive debtwill be eliminated, but they will be at the mercy of the auctionprocess as to who the new owner will be."

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.