Paprin returns to real estate market by purchasing distressed shopping centers.

As a child growing up in the metropolitan New York area, Yale I. Paprin was fascinated with real estate construction, and today the 40-year-old Paprin has capitalized on that early fascination by forming, his own company, Yale Realty Services Corporation, which specializes in the purchase of malls that have been foreclosed and purchased by banks.

Paprin remembers when he was a child watching his father, Maurice Paprin, who served 14 years as president of the Associated Builders and Owners of Greater New York, building apartment houses in Manhattan and Queens.

"When I was four or five, he was a builder and I used to be lifted up on scaffolds to watch," said Paprin, who founded Yale Realty Services in 1990, when he realized that a downturn in the real estate industry could equal increased yields buying and managing distressed properties.

The younger Paprin graduated from Case Western Reserve University in Cleveland with a degree in political science, but he never lost interest in real estate. In fact, after graduation, Paprin became a special assistant for real estate for the university's vice-president. While doing leases for Case Western, he first became familiar and gained valuable experience dealing with shopping malls.

Before founding Yale Realty Services, based in Chappaqua in Westchester County, Paprin was an active real estate investor in the late 1970s and early 1980s in the New York City area, owning and maintaining apartment houses, industrial properties and residential properties in the suburbs for re-sale. In 1986, however, Paprin anticipated the coming downturn in the real estate market and he sold all his real estate holdings.

According to Paprin, he recognized where the market was heading when former President Ronald Reagan's administration changed the tax laws, under the Tax Reform Act, which virtually eliminated real estate shelters in the late 1980s.

Paprin explained that real estate prices were arising fast during the 1980s and he didn't understand why until the Reagan administration changed the tax laws, restricting deductions of real estate losses only against real estate gains, so that real estate losses in practice became non-deductible. That's when Paprin said he realized what was happening and where the real estate market was headed.

"It was craziness, following the herd, increased appreciation was spurred by nothing else," said Paprin, describing that period. "People went into the business of selling losses."

As real estate values dramatically increased during the mid-eighties, Paprin noted, individuals jumped on the band wagon and started buying properties regardless of whether they made sound economic sense.

"People should have been born deer," Paprin observed, "because they like to follow the herd."

Never one blithely follow the crowd, Paprin sold off his real estate holdings, pursuing interests in the laundry machine vending field while patiently waiting before deciding it was time to return to the real estate industry.

Paprin found Yale Realty Services a little over three years ago for the purpose of buying and managing distressed real estate, and he has made a specialty of buying, refurbishing and relaunching foreclosed commercial properties from banks and insurance companies seeking to sell such holdings.

Yale Realty Services will buy distressed properties with potential from owners who are either unable to see solutions or cannot afford the necessary solutions, Paprin said.

Recently, the company purchased Enyon Plaza Mall in Archibald, PA, a 200,000 square-foot combination plaza and mall which is anchored by Burlington Coat Factory and ShopRite, from a New York bank for approximately $5 million. The bank stepped in when the plaza's previous owner defaulted on $4.8 million, according to a judgment filed with the Lackawanna County clerk of judicial records.

According to Paprin, the former owners had leveraged it up too much and had done nothing to promote the property. Paprin recognized the property's potential and bought the mall, located outside of Scranton, and plans to re-establish the plaza in the local community, starting with a new parking lot and roof.

Paprin stated that Realco Realty of Garden City, N.Y. has been hired to initiate a national leasing campaign for the Enyon shopping center complex, which has built in 1971.

What Yale Realty Services does is not unique, Paprin said, but real estate is a hedge guess against inflation and one can only speculate about the success of a shopping center's potential.

"Office buildings are generic, whether a building is on Madison Avenue or Park Avenue is not relevant," Paprin said. "The important point is tenant space and tenant price. When space on another street is at a lower price, circumstances dictate you move."

"Retail is already at a given location and making money," said Paprin. "You can only speculate about doing better at another location."

Yale Realty has a proven track record with three previous successful purchases and subsequent turn-arounds, including the 300,000 square-foot New Harbor Mall in Fall River, MA. Paprin saw the potential in the area, which boasted 130,000 potential customers within a five mile radius near a major thoroughfare where 60,000 drivers pass the mall daily, and jumped at the opportunity to purchase the property.

Paprin's firm completed renovations last August and New Harbour Mall, anchored by Bradlees and K-Mart, has currently reached 95 percent capacity, including tenants such as Payless Shoe Source and Record World. In fact, Bradlees has spent $2 million renovating the interior of their store and has hired Yale Realty Services to renovate the store's facade.

Yale Realty purchased the New Harbour Mall in February of 1992 from a New York bank which foreclosed on the property from its previous owner. Not only did Yale Realty Services purchase the mall at a favorable price from the bank, but Paprin also persuaded the mortgagee to lend additional funds as part of the mortgage for refurbishment of the property.

In addition to New Harbour Mall, Yale Realty Services owns several smaller retail properties throughout the northeast and currently is committed to purchasing over 1 million square-feet in shopping centers. The company also owns an office building, purchased from Fleet National Bank, in downtown Springfield, MA, which is 90 percent leased because of its proximity to the city's court houses, including a branch of the U.S. Postal Service.