Posted on 09/09/2009 9:56:32 AM PDT by Steelfish
Buyers of Huge Manhattan Complex Face Default Risk
CHARLES V. BAGLI September 9, 2009
Three years ago, the sale of the 110 red brick apartment buildings at Stuyvesant Town and Peter Cooper Village in Manhattan amounted to the biggest American real estate deal of all time.
Now the buyers are running out of time and money. Jerry and Rob Speyer and their partner, BlackRock Realty, who together paid $5.4 billion for the quiet middle-class redoubt near the East River, have nearly exhausted an additional $890 million set aside for apartment renovations, landscaping and interest payments. Rents are down 25 percent from their peak.
Real estate analysts say that the partnership’s money will run out as soon as December and that the owners are at “high risk” of default on $4.4 billion in loans. Two real estate executives who have been briefed on the finances insist that the owners can hold out, but only until February.
On Thursday, the partnership will go before the Court of Appeals in Albany to try to overturn a lower court decision that could force them to pay hundreds of millions of dollars in rent rebates to thousands of tenants.
Regardless of the outcome at the Court of Appeals, Stuyvesant Town and Peter Cooper Village are in trouble.
City officials have been monitoring the looming crisis, worried that the financial problems could eventually lead to default, deferred maintenance and disinvestment at a complex that has served as an oasis of affordability in Manhattan for middle-class New Yorkers.
Some 6,875 of the 11,227 apartments at the two adjoining complexes are rent regulated.
(Excerpt) Read more at nytimes.com ...
Why anyone would pay $5.40 -- let alone $5.4 billion -- to operate under constraints like this is beyond me.
How can we still have rent stabilization in the city? No wonder the project is in the toilet. If it’s not completed there will be the South Bronx Syndrome’’ explotion all over again. then the whores will return with their pimps and drugs and shootings( all of the thugs will be white don’t cha know)
The buyers foolishly thought they’d slowly get out from under the various rent constraints. Only folks with no understanding of NY politics could have believed that.
Gee, glad I don’t live in Stuy Town...wait a second...doh! The market-price rents are reasonable by Manhattan standards and would be lower if people weren’t clinging to their ridiculously low stabilized apartments. Once again the socialists are ruining a decent thing in their quest for Utopia.
That’s why I find it odd that this company in particular would bungle a real estate deal like this. Tishman Speyer also owns Rockefeller Center, the Chrysler Building, the MetLife Building, and other prominent buildings all over New York City.
Unfortunately, Betty convinced Gerry that NYC was "too big to fail."
Maybe they needed a good tax write-off.
What is unsaid is the current "cold war" in both complexes between the aging retirees and the "spoiled" college students who('s parents) pay considerably more rent than the former. This has been detailed in the local press.
Any one who agrees with this crap ought to go bankrupt.
I heard plenty about that before I moved into Stuytown and now find the whole argument was blow way out of proportion. Stuytown is the nicest place to live in Manhattan IMO barring several million to blow. My gf lives across the street from a zillionaire movie star and even he doesn’t get to walk out his front door into a pleasant park. Tishman’s attempts to make the neighborhood “hip” with silly little glass study rooms and film festivals were misguided because nobody has time for that stuff. But I’m a fan of the place overall and would prefer that everyone pay a fair market price as opposed to subsidizing some grannies who think they’re entitle to live in 1971.
I am guessing they hoped to flip it out to a greater fool, but were themselves that fool.
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