What do professional baseball players do with the millions theyrack up during their careers? Some, like Maurice “Mo” Vaughn, formerly aNew York Mets first baseman (after alonger career with the Red Sux…er, I mean Sox), enter the realestate business. Vaughn’s company (which he formed with hisattorney, and fellow managing director Eugene Schneur),Omni NewYork, develops and revitalizes properties andneighborhoods, working with community groups on social improvementsas well as providing affordable housing.

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Lately, it’s made a big splash in the distressed real estatemarket. Yesterday, the Real Deal reported that the firm wonan auction for 14 rent-stabilized troubled apartment buildings inthe Bronx that held a loan balance of nearly $24 million. Omniinitially purchased the notes last year, a deal that was touted bycity officials and housing advocates alike. The properties weredeemed abandoned by former owner Ocelot Capital Group, and were insuch a detrimental state that the NYC Housing Preservation andDevelopment department put all but three of them on the list ofworst-maintained buildings in the city. So last year Vaughn agreedto shell out $1 million in emergency repairs, spending about halfof that by midyear 2009.

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But this wouldn’t be a New York City real estate deal withoutsome controversy. According to some in the market, Omni bought thenotes from Fannie Mae through Deutsche Bank at an almost 80%discount, or $5 million. Those contesting the deal say the debtcould have garnered a much higher price, and blame political andmedia pressure, as well as the efforts of a certain nonprofitgroup, UrbanHomesteading Assistance Board of Manhattan, whichlobbied for Omni’s purchase.

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The group’s goal is to buy or take title to distressedbuildings, and rehabilitate and convert them to permanentlyaffordable co-ops. It also lobbies to change affordable housingpolicies in New York City and Washington, DC. Yet unlike otheradvocacy groups, UHAB, directed by Dina Levy, owns and managesproperties as well.

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UHAB played an important role in another, similar transactionalso involving former Ocelot Capital buildings. Hunter PropertyManagement landlord and principal Sam Suzuki bought six Bronxassets in May 2009. Now he’s in jail for failing to comply with ajudge’s order to repair one of those properties.

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Reportedly, UHAB urged to keep the price low for Omni and topenalize Suzuki for his non-compliance. According to the RealDeal, “UHAB, other housing advocates and government officialspushed for the discount because without it the low rents will notsupport both the millions of dollars needed in critical repairs ontop of a high debt level.”

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Yet the paper reports that some commercial real estate playersare “furious” with the group because it’s pushing down propertyvalues and it used housing code violations to get Suzuki arrested,even though the group itself has several violations on its ownbuildings.

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What does all this have to do Mo Vaughn and his company? Well,opponents of the auction’s results say the $5-million price tag forthe properties was significantly below market and the seller,Fannie Mae, could have gotten a better price from traditionalinvestors such as real estate investment firms or funds puttogether to buy distressed assets.

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Yet those buildings in question are in need of significantrepair, and these days, most distressed buyers aren’t toointerested in putting extra capital into properties, but are ratherseeking stabilized assets held by distressed owners.

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Gotts hand it to Mo.

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Photo Courtesy of NY Times

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So a genuine real estate player, even if he is a formercelebrity, wants to come in and get his hands dirty to revamp theseaffordable projects. What’s the big deal about that? Any researchon the company will show that Omni has been successful; since theend of 2004, the firm has bought and has either rehabilitated or isin the process of rehabilitating some 3,500 units of affordablehousing in New York State alone. It also has projects inMassachusetts and Wyoming.

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And this is a for-profit, private-sector company. Instead ofjetting off to an island in the Caribbean to spend his retirementyears, or peddling sports drinks on television, Vaughn (with hispartners) is instead spending his time giving back to communitiesin need. Taking over properties from former slumlords and makingthem safe, livable environments. One could say he's scoring betteras a real estate player than he did in the majors.

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Is it the politics behind the deal people are upset about? Theprice he paid for the portfolio? Both? Who cares? So he got a gooddeal, but he has his work cut out for him. I don’t know many folksout there that would take on this major-league-sized challenge.

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Got Rings?

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On a side note, we lost a baseball great today—GeorgeSteinbrenner, the overlord of the Evil Empire, passed away at hishome in Florida at the age of 80. A visionary who changed the worldof sports and turned around a struggling franchise, Steinbrennerwas in his 37th year as principal owner of the Yankees. Five yearsafter buying the team (in a consortium of investors) in 1973 for$8.7 million, he helped turn the Bronx Bombers into World Championsonce again. At the time of his passing, the Yanks had thewinning-est record in baseball, earning 11 American League pennantsand seven World Championships during his tenure. Could you imagineif he were a real estate guy?

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The Yankees, and baseball, will never be the same. Georgie Boss,you'll be sorely missed.

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