Mandy’s 2021 Buying Spree Tops $58M; Reports Offer Glimpse Inside Landlord Operation

Second of two articles.

Affiliates of Mandy Management spent another $58 million in 2021 buying 179 properties containing 558 different apartments, cementing the outfit’s role as one of New Haven’s largest landlords for low-income renters.

Four recent financial-industry reports offer a detailed look at how the real estate empire operates and rose to that role.

Those so-called ​“pre-sale reports” were published in April and in October by Fitch Savings and the Kroll Bond Rating Agency (KBRA). They analyze loans to Mandy Management affiliates that are worth tens of millions of dollars and that cover hundreds of Mandy-controlled New Haven apartments.

The reports paint a picture of an experienced investor-landlord company that knows how to grow, make money, pay off debts, and buy, renovate, and manage ​“distressed” housing stock — and use influxes of new cash not just on upgrading existing properties (spending an average of between $17,100 and $18,800 per unit), but also to buy new ones. 

They shine a light on just how old and geographically concentrated many of Mandy’s holdings are.

And the reports note that the majority of Mandy’s funding comes from large Israeli investors — and between one-third and one-half of Mandy’s tenants receive federal Section 8 or some other kind of rental housing subsidy.

The details included in those reports range from vacancy rates to apartment sizes to building ages to per-unit cash flows for hundreds of local Mandy-controlled rental properties, including for hundreds of units its affiliates added to Mandy’s portfolio in 2021.

Click here, here, here and here to read those rating agency reports in full.

Why The Reports Exist

The reports are publicly available because they are related to a wellspring of financing Mandy has tapped to continue its rapid growth. The reports examine two groups of landlord loans from across the country that were packaged together and turned into vehicles for international financial investment. Those mortgage-backed securities — called CoreVest American Finance 2021 – 1 Trust and CoreVest American Finance 2021 – 3 Trust — were put together in 2021 by the California-based lender CoreVest American Finance. 

CoreVest is a commercial lender that specializes in providing loans to investor-landlords who buy, renovate, and rent out one-to-four-family homes. CoreVest then packages those landlord loans into mortgage-backed securities, which investors from across the world can buy into and profit from if the borrowers of the underlying loans stay good on their mortgage payments.

CoreVest provided Mandy affiliates with nine mortgage loans totaling more than $89.3 million in 2021 and secured by hundreds of New Haven rental properties.

Because those CoreVest-to-Mandy loans make up such a significant share of these two recent mortgage-backed securities, the rating agencies analyzed several of those loans in detail to keep potential investors apprised of Mandy’s strengths and weaknesses as a steward of borrowed money.

All the while, the CoreVest-enabled cash flow helped Mandy affiliates go on their largest buying spree of New Haven real estate yet. 

The $58.4 million that Mandy affiliates spent adding 558 apartments to their local real estate empire in 2021 marked a significant step up from the $37 million they spent buying 390 apartments citywide in 2020, which in turn was up from the $16 million they spent buying 186 local apartments in 2019, which in turn was up from the $13 million they spent buying 173 local apartments in 2018.

Taken together, that means that Mandy affiliates have spent roughly $125 million acquiring 444 properties containing 1,307 different apartments in New Haven in the past four years alone.

“For more than 20 years, we’ve been committed to investing in the city of New Haven,” Mandy Management’s Yudi Gurevitch told the Independent by email when asked about why his company expanded at such a rapid clip in New Haven in 2021. ​“It’s a vibrant, market with enormous potential as evidenced by the myriad of development projects currently underway or near completion in the city.”

“This year as the market recovered to pre-pandemic levels, there were more opportunities available that fit our investment goals and criteria,” he continued. ​“We are bullish on the New Haven real estate market and believe the positive momentum is here to stay for the long run. However, we operate not only in New Haven, but in West Haven, East Haven and Milford which allows us economies of scale in terms of maintenance, operations and management.”

(A detailed look at Mandy’s 2021 acquisitions, as well as at other major real estate deals in town this past year, appears at the end of this article.)

As for why Mandy was able to find so many local properties to buy this past year, Gurevitch said, ​“We think many sellers found 2021 a good year to accelerate their exit due to a variety of macro-and micro-economic reasons such as generational transitions, potential changes in tax rates, supply chain constraints and labor shortages.”

All of this comes at a time when the city has taken several large local landlords, including Mandy Management founder Menachem Gurevitch, to state housing court over persistently unfixed code violations at some of their local rental properties. (Click here and here for stories on landlords’ responses to those court cases, including critiques of the city for poorly communicating with landlords about what needs to be fixed, when. Mandy’s Yudi Gurevitch has also argued that his company doesn’t just buy properties; they also spend millions of dollars fixing them up to make them better places to live. Click here for an article from the end of last year with different takes on Mandy as a landlord.)

Click on the map above for information on every local Mandy purchase from 2021.

Note: The pre-sale reports do not directly identify the borrower of each loan. You won’t find the name ​“Mandy Management” anywhere in the reports. However, when compared to mortgage records filed on the city land records database, the dates and dollar amounts of the loans described in these reports, as well as the geographic locations of the mortgaged properties, clearly identify the borrowers as affiliates of Mandy Management. The Mandy loans detailed in the CoreVest American Finance 2021 – 3 Trust reports are referred to as ​“Loan 2” and ​“Loan 7”, while the Mandy loan detailed in the CoreVest American Finance 2021 – 1 Trust is referred to as ​“Loan 2”.

Debt Refinancing & Closing Costs

Mandy affiliates received a total of eight different mortgage loans from CoreVest American Finance in 2021. The two sets of rating agency reports offer detailed information on just the three largest. 

Those were:

• A $26.6 million loan issued on Sept. 30 to Mandy’s SFR 2 DE LLC. The mortgage covers 121 residential rental properties containing 297 apartments in New Haven. The loan has a term of five years and a fixed interest rate of 4.24 percent. And according to CoreVest, the properties are appraised as worth a total of $35.5 million, giving the loan a loan-to-value ratio (LTV) of 75.0 percent.

• A $25.6 million loan issued on March 26 to Mandy’s Ref II SFR 1 DE LLC. The mortgage covers 90 residential rental properties containing 285 apartments in New Haven. The loan has a term of five years, and a fixed interest rate of 4.74 percent. According to CoreVest, the properties are appraised as worth a total of $34.2 million, giving the loan a LTV of 75.0 percent.

• A $9.646 million loan issued on Aug. 31 to Mandy’s Netz Keren DE LLC. The mortgage covers 28 residential rental properties containing 122 apartments in New Haven. The loan has a term of five years, and a fixed interest rate of 4.11 percent. According to CoreVest, the properties are appraised as worth a total of $13.3 million, giving the loan a LTV of 72.3 percent.

The rating agency reports make clear that Mandy affiliates used these loans primarily to pay off other loans and to purchase more rental properties. 

“Loan proceeds were used to refinance existing debt and pay closing costs,” Fitch’s report states about the $26.6 million loan from September. 

“The loan proceeds were used to refinance existing debt encumbering the underlying properties, fund reserves, and pay closing costs,” KBRA’s report states about that same September loan.

“The loan proceeds were used to acquire a portion of the underlying homes and refinance existing debt encumbering the other portion of the collateral properties,” KBRA’s report states about the $25.6 million loan from April.

Asked for comment on the role that CoreVest plays in Mandy’s overall business, Gurevitch replied, ​“CoreVest is a leading independent lender to real estate investors nationwide. For several years, we have established a strong working relationship with CoreVest and enjoyed a solid, productive customer-vendor relationship. We do not have a strategic partnership with the firm. We operate independently and focus on creating long-term value for our investors, customers, suppliers and employees.”

35-45% Of Tenants Receive Section 8

Both Fitch and KRBA emphasize to potential investors that the people behind Mandy Management are veterans in the ​“distressed” rental housing biz — that is, they know how to buy, renovate, rent out, and manage homes that were in foreclosure, about to go into foreclosure, or already owned by the bank.

“The sponsors have over 26 years of real estate experience in purchasing distressed properties and performing renovations with their own management and maintenance teams,” the Fitch report states in regards to the $26.6 million CoreVest-to-Mandy loan from September. 

The KRBA report states that, of the two individuals who own the Mandy affiliate that received the $26.6 million September loan, ​“One individual is a real estate investor that focuses on the acquisition and leasing of multi-unit residential rental properties. The other individual began his career as a clothing designer and has used the proceeds from selling his clothing brand to invest in real estate.”

The Fitch report states that the rating agency spoke with one of the Mandy affiliate’s owners via a conference call in October ​“to discuss the business, including acquisitions, management and strategy.” 

Below is a lengthy excerpt from that section of the report about what Fitch’s analyst learned about Mandy’s history and operations: 

The sponsor has been active in CRE [commercial real estate] for over 25 years and currently operates a portfolio of $385.0 million throughout New York City, Miami, Fort Lauderdale, Bridgeport, CT and New Haven, CT. The company was initially founded in Brooklyn, NY, where the sponsor acquired its first property before eventually entering the New Haven, CT market, which is where a majority of the portfolio is currently centered. The sponsor owns approximately 2,500 SFR [single-family rental] properties throughout the New Haven, CT MSA. The sponsor initially sourced financing from personal relationships with local investors but has since partnered with larger Israeli investors, which is where the majority of the current funding originates from.

The sponsor operates mostly in the New Haven MSA, which they consider to be a smaller, more manageable city. The sponsor has worked to develop strong relationships with most of the major brokers in the area to help facilitate new investment opportunities and also understand all of the local zoning laws and other regulations. The New Haven portfolio is made up of multiple asset types, from traditional SFR properties to 15-unit to 20-unit multifamily properties. The sponsor typically looks to a minimum of a 6% cap rate when considering property acquisitions, as they generally prioritize immediate sustained cash flow over future upside. The sponsor employs a long-term strategy and has only sold a handful of properties throughout the company’s history.

The company has grown to over 100 employees, and all aspects of the business, including property management, are handled internally. The company uses Yardi Systems to help with property management, including sourcing tenants and background/credit checks. Over the past year the company has acquired 800 new units and is looking to acquire an additional 25 to 50 units prior to YE21. The sponsor typically performs moderate renovations upon acquisition when needed but generally does not perform any substantial renovation projects.

Average rents for the portfolio are approximately $1,400 per unit, depending on size and location. Annual turnover throughout the portfolio remains low and many tenants have been in place for over five years. Although many of the properties are located in close proximity to Yale University, there is no dedicated student housing. The sponsor noted that approximately 35% to 45% of tenants throughout the portfolio receive Section 8 subsidies or some other rental subsidy.

Collections have remained strong throughout the pandemic, and the sponsor worked with all delinquent tenants to create repayment plans.

The KRBA report on the $25.6 million loan from March offers a few more details on the Mandy affiliate that received that mortgage loan. 

“The sponsors are two individuals, who are partners of a real estate investment firm formed in 2010 to primarily focus on the acquisition, renovation, and leasing of residential and office properties,” the report reads. ​“Combined, the sponsors currently own and manage over 500 residential properties and several office buildings throughout the United States. The portfolio is managed by an affiliate of the sponsor.”

90.2% Occupied

The 121 Mandy-controlled properties covered by the $26.6 million loan were only 90.2 percent occupied as of September, according to the Fitch and KRBA reports.

According to Fitch, this occupancy rate should be viewed as both a strength and a concern to investors when looked at in the larger context of the New Haven housing market. 

A strength, because New Haven’s limited housing supply has meant that the city has had a relatively low vacancy rate in recent years — ​“peaking at 6.1% in 2019, and [averaging] 3.6% since 2010. New supply is expected to increase vacancy to 5.6% as of [2023] before trending back down to 5.4% as of [2025].”

A weakness, because all 121 properties covered by this loan are geographically concentrated in the New Haven Metropolitan Statistical Area (MSA), ​“which increases idiosyncratic market event risk.”

The 28 Mandy-controlled properties covered by the $9.6 million loan were 91 percent occupied as of August.

And the 90 Mandy-controlled properties covered by the $25.6 million loan were 97.2 percent occupied as of March.

How do those numbers compare to other occupancy rates associated with other landlord loans in that same CoreVest trust? 

According to Fitch, the 332 rental properties in Houston and San Antonio, Texas that were covered by a $30.7 million loan to a different landlord were 97.4 percent occupied as of July; the 48 rental properties in Bloomington, In. covered by a $26.5 million loan to a different landlord were 100 percent occupied as of August; and the 184 rental properties in Atlanta covered by a $21 million loan to a different landlord were 96.4 percent as of September.

$18,800 Per Unit In Renovations

The Fitch reports list ​“recent renovations” as a strength when describing the various Mandy-controlled properties covered by these CoreVest loans. 

For the 121 properties covered by the $26.6 million loan from September, the Fitch report states, the borrower has invested ​“approximately $5.8 million (or $18,800 per unit) in rehabilitation costs throughout the portfolio since acquisition in early 2021. The total costs basis for the portfolio is $32.6 million (or $106,100 per unit).”

For the 28 properties covered by the $9.6 million loan from August, it continues, the Mandy affiliate has invested ​“approximately $2.1 million (or $17,100 per unit) in rehabilitation costs throughout the portfolio since acquisition between 2015 and 2017. The total cost basis for the portfolio is $9.6 million (or $108,900 per unit).”

And for the 90 properties covered by the $25.6 million loan from March, the Mandy affiliate has ​“invested approximately $69,000 per property on average in rehabilitation costs at the portfolio. The total costs basis for the portfolio is $31.6 million (or $351,400 per property). All of the properties received grades of either ​‘C3’ or ​‘C4’ from the appraiser.”

Again, how does that compare to other mortgage properties included in these trusts?

Fitch states that the Atlanta-based landlord who received a $21 million loan in September invested approximately $2.9 million, or $15,300 per unit, in rehabilitating the 184 properties covered by that mortgage; a California-based loandlord who received a $15 million loan in July for 51 properties in Oakland and Los Angeles has made ​“no recent material renovations” to those properties; and a Chicago-based landlord who receive a $9.9 million loan in July invested approximately $2.8 million, or $32,900 per unit, in renovating the 65 rental properties covered by that mortgage.

Avg. Age: 107 Years Old

Two of the biggest concerns identified by both Fitch and KRBA about Mandy’s mortgaged New Haven properties are just how relatively small and old they are.

“The properties have an average age of 107 years, which is older than the average of 23 years for the homes included in the past 20 KBRA-rated single-borrower SFR deals,” the KRBA report reads about the 121 Mandy-controlled properties covered by the $26.6 million loan from September. ​“Additionally, the build dates for subject properties are older than the comparison set, which have an average age of 53 years.”

That same report states that the apartment sizes for the 121 properties covered by that loan range from 445 square feet to 2,110 square feet, with an average square footage of 982.

That’s ​“smaller than the average size of 1,820 sf for the homes securitized in the 20 KBRA-rated single-borrower SFR transactions issued since 2018. Additionally, the size of the subject properties is smaller than the average of 1,261 for the properties included in the comparison set.”

“All else being equal,” the rating agency report continues, ​“KBRA generally views smaller, older homes as less marketable than larger, newer homes in the event of a default and subsequent liquidation.”

Fitch’s report agrees in its assessment of the size and age of the properties covered by this September loan.

“The portfolio properties were constructed between 1900 and 1987 and have an average vintage of 1927,” the report states in its ​“Concerns” section.

In Fitch’s assessment of the 90 properties covered by the $25.6 million loan from March, that report reads, ​“The portfolio has an average age of 93 years with average original construction occurring in 1917. The sponsors typically complete capital expenditure renovations on each of the properties after acquisition.”

Net Cash Flow Per Unit: $6,487

According to KBRA, CoreVest identified the net cash flow per unit for the 121 rental properties and 297 apartments covered by Mandy’s $26.6 million loan from September as $6,487.

That refers to the amount of money left over at the end of each month after rent is collected and all the bills are paid.

They identified the net cash flow per unit for the 28 rental properties and 122 apartments covered by Mandy’s $9.6 million loan from August as $6,246.

And they identified the net cash flow per unit for the 90 rental properties and 285 apartments covered by the $25.6 million loan from March as $7,200.

Again, how does that compare to other mortgaged properties included in these CoreVest trusts?

According KBRA, CoreVest identified the net cash flow per unit for 332 rental properties in Houston and San Antonio as $9,770; the net cash flow per unit for 48 rental properties in Bloomington, In. as $8,262; and the net cash flow per unit for 184 rental properties in Atlanta as $7,388.

2021 Mandy Acquisition Roundup

After that look through the keyhole, as it were, at Mandy’s business and operations — at least in relation to the hundreds of local mortgaged rental properties included in these CoreVest trusts — what are some of the newest additions to the Mandy real estate empire in New Haven?

According to the Independent’s review of a year’s worth of city land records, in 2021:

• Mandy affiliates spent a total of $58,491,273 buying 179 properties containing 558 apartments across the city. Two of those properties are a vacant former convent and Catholic school on Saltonstall Avenue and Richard Street in Fair Haven. A Mandy affiliate won permission in 2021 to convert those former church properties into 18 new apartments.

• Those new Mandy acquisitions were concentrated in Fair Haven ($8.1 million spent / 88 apartments bought), the Hill ($5.7 million / 67 apartments), Newhallville ($4.6 million / 55 apartments); Wooster Square ($9.4 million / 52 apartments); and Edgewood ($4 million / 41 apartments).

• Those new Mandy acquisitions consisted primarily of three-family homes ($14.6 million spent / 52 bought) and two-family homes ($8.9 million / 51).

• Mandy’s average property purchase price was $326,767, while the average appraisal for those properties at the time of purchase was $232,271.

And just a brief snapshot of some of the individual rental properties picked up by Mandy affiliates in 2021 include:

• The seven-unit apartment building at 533 Chapel St. and the 12-unit apartment building at 604 Chapel St., which the Mandy-controlled ABCD Investments DE LLC bought for a combined sum of $4.1 million on Dec. 15 from Constance D’Atri. Those two properties are currently appraised by the city as worth a combined sum of $2,366,300.

• The 32-unit apartment complex at 1171 Chapel St., which the Mandy-controlled 1171 Chapel LLC bought for $5.1 million on Dec. 7 from 1171 Chapel LLC. The property is currently appraised by the city as worth $2,054,900.

• The six-unit apartment house at 12 Lilac St., which the Mandy-controlled SFR 2 DE LLC bought for $550,000 on March 24 from Lilac Street LLC. The property last sold for $370,000 in 2018. The property is currently appraised by the city as worth $370,300.

• The four-family house at 157 Howard Ave., which SFR 2 DE LLC bought on Jan. 15 for $370,000 from Bobsie Perry. The property last sold for $369,000 in 2003, and the city most recently appraised it as worth $388,600.

• The three-family house at 95 Willis St., which SFR 2 DE LLC bought on Feb. 8 for $280,000 from Antoinette Altieri. The property last sold for $75,000 in 2003, and the city most recently appraised it as worth $265,600.

• The three-family house at 206 Lamberton St., which the Mandy-controlled Altshuler Investments DE LLC bought for $265,000 on Dec. 7 from Philip Gonzalez. The property last sold for $100,500 in 2001, and the city most recently appraised it as worth $292,000.

• The two-family house at 386 Lighthouse Rd, which SFR 2 DE LLC bought for $215,000 on Jan. 29 from 386 Lighthouse Road LLC. The property last sold for $95,000 in 2016, and the city most recently appraised it as worth $206,100.

• The two-family house at 208 Clinton Ave., which Altshuler Investments DE LLC bought for $215,000 on Dec. 8 from 969 Elm LLC. The city most recently appraised the property as worth $264,‘100.

• The single-family house at 112 Emerson St., which SFR 2 DE LLC bought on March 3 for $140,000 on from BIF LLC. The property last sold for $120,000 in 2017, and the city most recently appraised it as worth $167,200.

Asked why Mandy affiliates spent significantly more money buying up more New Haven rental properties this past year than in previous years, Yudi Gurevitch told the Independent, ​“Several of the deals that we finalized in 2021 were postponed in 2020 due to pandemic-related economic uncertainty. Others, fit our investment fundamentals. As a result, we acquired more properties than in years past but this was not intentional. Rather, it was a reflection of market supply. We are very enthusiastic about the opportunity to bring these properties online and continue to deliver quality, affordable housing in the diverse neighborhoods we serve.”

Gurevitch was asked what 2022 will bring for Mandy Management.

“Real estate is and always will be about location,” he responded. ​“Now more than ever before, home is that safe and comfortable place where we live, work, play and enjoy life. With mortgage rates remaining low and the return to the office underway, we expect plenty of opportunities to review. We look at dozens of properties every day and embrace a long-term mindset.”

Other Top Sales From 2021

Even though affiliates of Mandy Management spent more money buying more rental properties in more different areas of the city than anyone else in 2021, they of course were not the only buyers to invest hefty chunks of change in New Haven real estate. 

Some of the largest real estate transactions in the city this past year included:

• West Gate Ventures LLC’s purchase of the 137-unit apartment complex at 35 and 145 Cooper Pl. from 35 Cooper LLC for $21 million on Jan. 28. The new owner is a holding company controlled by Shloime Rosenberg, and the seller was a holding company controlled by UOB Eagle Rock Multifamily Property Fund LP. The properties last sold for $12.25 million in 2012, and the city most recently appraised them as worth $16,916,200.

• Fairbank Community Partners’ purchase of the Fairbanks 121-unit apartment complex at 355 Ferry St. from RAHF Fairbank Preservation LLC for $11.1 million on April 9. The property last sold for $8.3 million in 2015, and the city most recently appraised it as worth $10,887,500.

• View on the Green LLC’s purchase of the 45-unit office tower at 129 Church St. from 129 Church St LLC for $8 million on Oct. 20. The new owner is a holding company controlled by Isaac Shaer and Shmuel Levitin, and the seller was a holding company controlled by MOD Equities’ Jacob and Josef Feldman. The property last sold for $6.9 million in 2014, and the city most recently appraised it as worth $8,164,200. MOD Equities won city permission in 2021 to convert the property into 92 new market-rate apartments.

• New Haven Propco LLC’s purchase of the 150-bed RegalCare nursing home at 181 Clifton St. from 181 Clifton Street Realty LLC for $7,999,500 on Oct. 22. The new owner is a holding company controlled by Menajem Salamon, and the previous owner was a holding company controlled by Eliyahu Mirlis. The property last sold for $5,940,000 in 2019, and the city most recently appraised it as worth $2,782,100.

• 600 Long Wharf Drive Industrial LLC’s purchase of the Sports Haven off-track betting complex at 600 Long Wharf Dr. from Sportech Venues Inc for $6 million on March 31. The city most recently appraised that property as worth $8,852,600.

Previous story: How $100M+ Flowed To Megalandlords