The Announcement
"We are going to sell every asset, all of them," he said. The company's Detroit portfolio includes about 700 properties. RealT also owns roughly 170 properties outside Detroit, but Jacobson did not clarify whether those would be sold.
How It All Fell Apart
RealT has endured intense financial pressure for many months.
In April, the city and RealT entered into an accord that handed oversight of the Detroit portfolio to a designated trustee, Charles Bullock. Per that accord, Bullock holds ultimate authority on any sale of Detroit real estate.
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Jacobson stated that the liquidation choice was triggered by an investor's allegation of misconduct in messages to Bullock. According to Jacobson, those messages damaged the relationship, and since then, Bullock has declined to take any payments directly from the Jacobson brothers. "So now he is going to sell the assets and pay himself," Jacobson said on the call. "We can't do anything because he already had the authority to do that under the court order."
Bullock disputed Jacobson's account. "Mr. Jacobson's representation of my position (and the basis for my position) is inaccurate," Bullock wrote by email.
Previously, Bullock claimed in a court document that RealT was already breaching the arrangement by not paying its portion of Bullock's bill ($33,322.50), by not keeping required insurance active, and by not correctly reporting occupancy status. That plea was subsequently dropped after talks, per Detroit Corporation Counsel Conrad Mallett. Mallett further noted that the Jacobsons have allocated insufficient funds for proper portfolio rehabilitation.
What Comes Next for Detroit and the Investors
Mallett stated that the city would attempt to offer chances for renters and first-time buyers to acquire properties. However, he pointed out that RealT has not submitted any documents to the court yet. "Do they mean that they are going to go to (the judge), ask if the case be dismissed because they intend to file for bankruptcy?" he said. "Go to court, give us the appropriate notice … and let's have the judge evaluate it."
RealT's attorney, Andrew Creal, declined to comment.
Delomel said RealT "seems to be a scam." He plans to lodge a complaint in France come autumn on behalf of investors.
One of the investors is a French content creator and ex-RealT backer known as Un Peu Moins Pauve. He asked to remain unnamed, citing death threats he claims to have gotten due to his recent advocacy. "What we want to obtain is redress through reimbursement of our assets, and to see the CEOs go to prison," he said.
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