Tenants Fret Over Big Debt at a Top Address

In 1994, a little-known real estate investor, Gary Barnett, bought the Belnord, a 1909 landmarked 12-story apartment building on the Upper West Side of Manhattan, bringing an end to one of the city’s longest and most acrimonious tenant-landlord battles. He paid around $15 million and agreed to settle a slew of pending lawsuits.

Mr. Barnett is now one of New York’s busiest developers, as the president of the Extell Development Company. He has spent tens of millions of dollars restoring and upgrading the long-neglected Belnord, which occupies the entire block from 86th Street to 87th Street between Amsterdam Avenue and Broadway and has 215 apartments. But like many other landlords of New York residential buildings that are subject to the city’s strict rent regulations, Mr. Barnett put more debt on the Italian Renaissance-style Belnord than its rental income could support. He stopped paying his sizable debt service on the Belnord in May and could wind up walking away from it, a prospect that alarms longtime tenants...