For some retired professional athletes, the fame and fortune garnered during their playing days have become a passport to a new career in finance and investment.
Former Boston Red Sox and New York Met slugger Mo Vaughn, who was known for his home runs and expansive waistline, is the latest retired professional athlete to make headlines with his exploits off the field in the business world. Vaughn, through his real estate investment company Omni New York LLC, which he co-owns with mergers and acquisitions lawyer Eugene Schneur, has been making deals for run-down apartment complexes that need work and maintian and manage these developments to the small supply of affordable housing in the New York City area.
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According to the Daily News on Feb. 6, Vaughn was not even allowed to step up to the plate for Starrett City in Brooklyn, the largest federally subsidized apartment complex in the U.S. with 5,881-apartments. Vaughn says the complex's broker, CB Richard Ellis, did not even offer his company a bid packet. Vaughn and Schneur were told they were not given a packet because their financial backers did not conduct themselves properly in the Stuyvesant Town bidding process last fall. Could that be code for Omni didn't want to overpay for a residential property? Experts say Starrett could garner close to $1 billion but politicians including Elliot Spitzer insist he will use the influence of his office to find a buyer who will keep the complex affordable.
FILLING A VOID
Vaughn's latest successful deal is the purchase of a 385-unit Brooklyn housing project, Noble Drew Ali Plaza in Brownsville, for $21 million from Abdur Rahman Farrakhan, the New York Post reported. Overall, Vaughn's company focuses on developing and managing properties for the lower and middle classes, segments that seem to have a great demand for affordable housing, an asset hard to find in the New York City area, with so much property earmarked for luxury housing. Vaughn wants to change that. Omni New York, created in 2005, has acquired and renovated close to 1,200 units considered distressed housing in New York City neighborhoods, neglected by some investors for high crime rates and lower economic landscapes.
As the Post reported, Vaughn would put another $20 million to $23 million into Noble Drew Ali Plaza for upgrades. Tenants have sued its former owner for lack of services like heat and water and failure to make repairs that include cracked walls, faulty pipes and rodent infestation.
SCORING OFF THE COURT
Hall of Fame basketball player Magic Johnson was known for his wizardry and ability to direct a team on the court. He's been able to parlay his on-court tenacity and ability to foster teamwork while working with others in the world outside of basketball. Johnson was one of the early advocates of investing in underserved urban communities with the creation of Johnson Development Corp. in 1992. One of its first projects was to co-invest with a local partner in a shopping plaza in West Las Vegas, a largely black neighborhood. The project was one of the first new developments that neighborhood had seen in 30 years. Johnson Development went on to partner with Starbucks, Washington Mutual and Sony Theaters to bring these businesses to underserved communities in major U.S. cities like Los Angeles and New York.
Johnson furthered his mission of investing in underserved metropolitan areas by creating a private equity fund, Canyon-Johnson Urban fund, in 1998, which today has about $1 billion in managed capital primarily focused on urban revitalization projects in the U.S. The fund is managed by Canyon-Johnson Realty Advisors LLC, a partnership between Canyon Capital Realty Advisors LLC and Johnson Development. Today, Johnson's focus of investing in underserved urban communities has become a bigger part of fund portfolios. Phoenix Realty Group, a national real estate fund, has made several investments in Harlem. In December, Phoenix reached an agreement to develop a mixed use, multi-income condominium project in central Harlem. Johnson has also been able to get the California State Teachers' Retirement System and New York City Retirement System funds to invest in his urban funds. Bank of America's private equity group recently teamed up with the Initiative for a Competitive Inner City, a nonprofit economic development corporation, to host an event in December designed to match owners of inner city businesses with private equity investors.—Gerald Magpily
| Dealwatch executive summary |
Date |
Action |
| 02.06.07 |
Vaughn reportedly loses bid for Starrett City |
| 01.10.07 |
Omni New York reaches agreement to buy complex in Brownsville |
| 2005 |
Vaughn and Schneur form Omni New York |
Source: The Deal |
