CitiApartments, the real estate and apartment management company with its tentacles all over the City, already had a pretty bad reputation before this year.
But in the past several months, with the forced returns of a ton of their buildings and a pattern of not returning security deposits, their reputation has gotten so bad they've had to change their name to First Apartments.
December's issue of San Francisco magazine has an 8,000-word investigative piece telling the sordid tale of the company, whatever they're called— a tale that paints them as, well, the devil. Led by the Lembi family (but really son Walter as founder Frank has stepped back a bit), the plan was to buy, buy, buy, then kick out the olds, jack up rent and kill pasta night outright.
All of it was fueled by the "same financial geniuses who brought the world economy to its knees." Two baddies, one story.
A few choice bits from the feature's gory details:
· When a woman finds out her father innocently sold the family's North Beach building to another native San Francisco family (i.e., the Lembis), she loses it. "'They built it with their flesh and blood,' Cynthia remembers crying, 'and you sold it to Satan.' "
· "When one tenant refused Citi's buyout offer, a Citi employee showed up at the door, armed and wearing combat fatigues, and demanded proof of residency and immigration status."
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· After CitiApartments bought the Gaylord Hotel near Union Square, they "banned tenants from using common areas, putting an end to Friday-night happy hours, communal Sunday breakfasts, monthly pasta nights— and a close-knit community that had taken years to create."
· The company employed a former nightclub bouncer to evict tenants. The hired muscle also functioned, according to CitiApartments, like a one-man security squad for the TL, shooing away prostitutes and stoop-sleepers.
· Citi often looked hard for grounds to evict, or otherwise pressured tenants into leaving themselves. Or they went the buyout route. At the above Satan-owned building, they offered a 30-year resident a buyout, starting at $10,000, but the sum had become $45,000 by October of last year.
According to the piece, CitiApartments more or less devoured properties indiscriminately, though they preferred pre-1979 rent-controlled buildings. Since 2003, they've bought more than 170 properties, totaling almost $1 billion. The idea was to convert large swaths of low-return, rent-controlled apartments into big moneymakers by turning them, one at a time, into homes for the rich. Just to get a picture of what was going on: after succeeding in getting one socialite to move out of her tony Park Lane apartment in Nob Hill, they were able to raise the rent from $3,605 to somewhere in the neighborhood of $12k a month.
The global banking system of the last few years gets major billing in the story too. Big banks wanted in on the lucrative San Francisco real estate market, but the City, says San Francisco magazine, has traditionally been more about mom-and-pop landlords.
"One of the only real-estate companies in town big enough to get into this high-stakes game was Trinity Properties, owned by Angelo Sangiacomo. But the Sangiacomos were known to be risk averse. Walter Lembi, on the other hand, was willing to go all in." In one recounted scene, Walter stands in a lobby and raises his arms "in a bodybuilding pose, crying out, 'I’m going to be bigger than Angelo!' "
Martini-fueled antics aside, the binge has hardly turned out well for the company. Now, though, the Lembis might be quietly plotting a comeback. A company founded by Walter Lembi's son, Taylor — called Urban Pioneers — is managing some of the properties that CitiApartments barfed up some months back. To be continued! (For the interested, the original story has even more dirt.)
