Developer Eric Blumenfeld lost control of a South Philly condo building where ‘everyone has something to complain about’

Philadelphia developer Eric Blumenfeld has lost control of the landmark Marine Club condo building at Broad Street and Washington Avenue amid an ongoing financial crisis involving upward of $200 million in debt.

The property, a 120-year-old office and warehouse complex that was converted into a 295-unit residential complex in the 1980s and renovated in 2000 by Blumenfeld, has been at the center of multiple, yearslong disputes — in the form of both legal claims from investors and complaints from residents about the building’s neglect as Blumenfeld’s finances have collapsed.

“The general temperature of people is really grim,” said Troy Feldman, who’s lived in the Marine Club since 2020. “It’s a unique building, and it’s honestly gorgeous, [but] everyone has something to complain about. Everybody has multiple bad stories.”

Residents describe rodent infestations, broken elevators, utility outages, and water infiltration, especially for units on the top floor. Others described minor nuisances in a complex that marketed high-end amenities — that seemed to always be broken.

“There was a Jacuzzi that was never open,” recalled former tenant Adam Schlesinger, who moved out earlier this year. “It was right there behind glass. Like it was taunting you.”

In late November, Blumenfeld lost control of the property as the result of legal action brought against him by a subsidiary of New York Mortgage Trust, which had invested millions in the building nearly a decade ago. The company successfully argued that Blumenfeld had failed to distribute millions from their share of the building’s proceeds, triggering a provision allowing the investment firm to effectively take ownership of the complex.

Residents hope the change will mean a turnaround in the building’s fortunes as these investors have already moved to install a new property management company.

Blumenfeld was best known for a string of successful redevelopment projects along North Broad Street, including two large loft conversions; the rehab of the Divine Lorraine, a storied Victorian hotel; and the transformation of a crumbling opera house into a Live Nation concert venue, now known as The Met.

But, in recent years, several lenders have gone to court, asserting Blumenfeld is in default on a string of different loans tied to his various holdings.

Blumenfeld declined to comment for this article. But he has contended in lawsuits and previous interviews that he is the victim of unscrupulous financiers seeking to take possession of his once-extensive real estate holdings.

The developer’s outstanding debts came to a head recently as investment companies tied to Jeffery Yass, cofounder of the Susquehanna International Group and Pennsylvania’s richest man, foreclosed on the Divine Lorraine and another nearby property. Lawyers for these companies stated in court documents that the developer’s outstanding loan balance exceeded $87 million.

Other investors took possession of Abbott Square, a block-long South Street condominium complex originally developed by Blumenfeld’s father, at a sheriff sale in November to satisfy a portion of another $27 million debt. Yet another lender, the Bixby Bridge Trust, is actively seeking to take possession of the Mural Lofts apartments in connection with another $22 million.

The developer has maintained, in court filings, that his business was savaged by the COVID-19 pandemic and has asserted that some of his lenders conspired to take advantage of this misfortune to seize his properties for a fraction of their true value.

In wide-ranging interviews last month, Blumenfeld also emphasized that his career has been defined by high-risk, high-reward projects.

“You have to understand that my projects are impossible,” Blumenfeld said in early November. “Everything I’ve done, I’ve always put the ranch up. All my assets are on the line.”

The Marine Club building dates to 1904, when it served as the Marine Corps quartermaster’s regional office and supply depot. In the mid-1980s, it was redeveloped into an apartment building, which Blumenfeld then acquired and renovated in 2000.

The investment brought revitalization and a few dozen extra units (some with bi-level layouts), a landscaped courtyard, and an enlarged fitness center and lobby. Early resident reviews were favorable, with one tenant raving to The Inquirer in 2002 that “the courtyard, once just dirt, now has lighting and fountains. … Management even throws parties for us there.”

In 2005, Blumenfeld invested more into the building, offering tenants the opportunity to buy their units and turn them into condos. At the time, he told The Inquirer that he expected units to sell for as much as $400,000 ($650,000 in today’s dollars). Today, some residents own their units, while others rent them.

According to some residents who have lived there since the initial renovations, the Marine Club’s troubles are not all new.

“It’s been going on since I moved in 17 years ago,” Michael Trueson, a retiree who owns a unit in the building, said in a November interview.

However, both owners and renters alike say conditions seemed to deteriorate at a more rapid clip in recent years, as Blumenfeld’s legal and financial troubles mounted.

“All these problems were existing” when Trueson moved in, he said. “But lately things have really been getting out of hand.”

One resident also sued in early November, accusing Blumenfeld’s former company of renting units in the building without rental licenses or lead abatement certifications, and the building failed a battery of city building code inspections this year.

Department of Licenses and Inspections records showed active fire code violations from this fall, including deficient smoke detectors and emergency exits, along with others related to generally “unsanitary” conditions.

“A bunch of people had to call L&I before anyone even came to look at the damage in the hallways,” said Kaylee Gavigan, who moved out of the building in 2022 but keeps in contact with current residents.

Gavigan said that when she moved into a unit on the top floor in 2021, she noticed a hole in the ceiling that hadn’t been there during her walk-through. It proceeded to leak water into her apartment every time it rained.

“They did send someone to spackle over it, and they told me that they fixed the roof,” Gavigan said. “But then there was another really bad storm, and the hole reopened. I came home and my poor dogs were in my apartment barking at the dripping ceiling.”

During this same time period, legal and financial issues with the building were mounting.

Wells Fargo and mortgage servicer LNR Partners filed to foreclose on the building in 2021, asserting that Blumenfeld had defaulted on a mortgage tied to the building and owed some $28.8 million, at that time.

In that suit, attorneys for lenders claimed Blumenfeld was accountable for the poor conditions in the building, alleging that he was “plundering the property of its income for unrelated uses, absconding with security deposits, diverting, and converting rents.”

The developer later countersued, accusing the bank in turn of attempting to “take control of the property.”

But both actions were complicated by the existing claims of yet another investor, New York Mortgage Trust, which, in 2014 invested millions in Blumenfeld’s company in exchange for a minority interest in the Marine Club.

In 2020, the trust asserted that Blumenfeld had failed to pay out their share of revenues from the complex and triggered an arbitration process. Last year, an arbitrator granted New York Mortgage Trust a multimillion dollar award, including the right to take effective possession of the Marine Club to collect on money owed, per a provision in their initial financing agreement.

Blumenfeld is still contesting aspects of this decision in a federal appellate court. But attorneys for New York Mortgage Trust in November secured a separate court order affirming the company’s control of the building, effectively absorbing Blumenfeld’s holding company and quickly moving to fire the developer’s property manager.

Blumenfeld’s attorneys are still appealing the original arbitration award. And while the new owners could continue to operate the complex and attempt to satisfy the still-outstanding claims from Wells Fargo and LNR, they could also opt to push the building to sale.

An attorney for the investment trust declined to comment on ongoing litigation, as did attorneys for Wells Fargo and LNR.

Still, residents described themselves as cautiously optimistic about the new management company after enduring years of neglect — especially renters, who described long waits for maintenance or the replacement of appliances.

“A lot of people are hopeful,” Feldman said. “Their talk is good. They seem professional. But from my perspective, it’s a believe-it-when-I-see-it situation.”

But he also said he has no plans to move from a unit he got at a deeply discounted price — $160,000 — that sits above SEPTA’s Broad Street Line and within walking distance to both Passyunk Avenue and Rittenhouse Square.

“The location is fantastic,” Feldman said. “The market’s going up. They’re putting up an apartment building across the street. I purchased it knowing that my value should go up a lot, given that the building gets into a stabilized state.”

Correction: An earlier version of this article inaccurately stated which company filed to foreclose on the Mural Loft building.