Embattled Landlord Seeks $36M for LES Former Day Care Site



255 E. Houston St.
255 East Houston Street.

A controversial landlord has put a former day care center and its old schoolyard on the Lower East Side back on the market for $36 million.

Samy Mahfar, whose rent-stabilized tenants at another building have alleged he forced them out for luxury tenants, bought the crumbling four-story, 10,840-square-foot lot at 255-259 East Houston Street. and 171-173 Suffolk Street for $7.7 million in 2004, according to city property records.

But the site now could accommodate as much as 54,896 square feet, or 63,960 square feet with a community facility bonus and 69,728 square feet with an inclusionary housing bonus, according to Massey Knakal Realty Services.

“Development opportunities are becoming increasingly rare along the East Houston Street corridor as demand shifts east,” said Massey Knakal’s Michael DeCheser, who is marketing the site that’s only two blocks from Katz’s Delicatessen, in a prepared statement.

Cushman & Wakefield previously marketed but never sold the L-shaped site, which has lain dormant since the Action for Progress Day Care Center had to move out in 2010 after there were cracks in the building from the demolition of a church next door.

Cracked graffiti door
Cracks and graffiti on the building’s front door.

The city Department of Buildings issued Mr. Mahfar and his company SMA Equities a $5,000 fine for “failure to maintain [building] walls & appurtenances in a code compliant manner” in 2011 and slapped the firm with a $1,500 penalty that same year for not documenting any corrections to address the violation, according to the agency’s website. Both violations are still active.

But Mr. Mahfar did settle a lawsuit filed against him last year by the Community Development Project of the Urban Justice Center and the Cooper Square Committee on behalf of residents of 143 Ludlow Street who alleged Mr. Mahfar hired a tenant-relocation specialist and turned the building into an unlivable construction site, as The New York Observer reported. Mr. Mahfar paid tenants a rent abatement to resolve the suit, said Brandon Kielbasa of the Cooper Square Committee.

“The type of ownership that we’ve seen is alarming,” said Mr. Kielbasa, the committee’s lead organizer. “We continue to work with anyone who lives in a building owned by SMA Equities.”

The former schoolyard.
The former schoolyard.

Mr. Mahfar did not return phone calls asking for comment Monday. SMA Equities has a portfolio of 5 million square feet of office space and has developed over 3,000 acres in New York, New Jersey and Florida, according to the company’s website.