Stuyvesant Town And Peter Cooper Village On Verge of Ruin

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Today's Times exposé on the financial woes gripping the owners of StuyTown and Peter Cooper Village is filled with insider analysis that makes our eyes glaze over, such as, "At Stuyvesant Town, there is a $3 billion first mortgage, or commercial mortgage-backed security, and a $1.4 billion second loan, known as “mezzanine debt” held by SL Green, the government of Singapore and others." But the bottom line is easy enough to grasp; as one analyst puts it, "I’d say their equity has been wiped out, given the decline in apartment values."

The city's housing commission, among others, believes Tishman Speyer, which controversially acquired the properties for $5.4 billion three years ago, is at high risk of default on some $4.4 billion in loans. Sources say the company only has enough juice to hold on until February, and even co-CEO Rob Speyer admits "the asset is going to require a restructuring. Once the court case is resolved, we’ll speak to our debt holders as well as our fellow equity investors." In March the state appeals court ruled that developer Tishman Speyer had wrongfully raised rents and deregulated thousands of apartments after receiving special tax breaks; the decision is being appealed, but if upheld, the market-rate tenants could seek treble damages, costing Tishman Speyers and parteners more than $200 million. (A ruling is expected as soon as tomorrow.)

Naturally, the whole mess has tenants uneasy; Daniel R. Garodnick, a city councilman who lives in Peter Cooper Village, says, "Residents are increasingly concerned that the maintenance of the buildings is slipping, even as they are getting hit with a flurry of potential charges for major capital improvements." And a recent report from Realpoint, a credit rating agency, estimates that the property has a value today of only $2.13 billion, suggesting $1.9 billion in equity has gone down the drain.

Rafael E. Cestero, the city’s housing commissioner, tells the Times, "We are absolutely keeping an eye on it. It’s an iconic complex. We’re not doing this to bail out anybody who was part of the original transaction. Those folks are going to take their lumps. We are looking at how we can ensure that the rent-stabilized units and the families that live there and families that could live there in the future could be insulated from the unwinding of this deal."

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By John Del Signore in News on September 9, 2009 2:09 PM

Comments [rss]

MTraum

There's so much conflict surrounding how this area is being managed. It seems like some like it, some love it, and many either hate it and are vocal about it. One thing is for sure...Everyone who either lives in Peter Cooper Village or Stuyvesant Town or is thinking about living there, or thinking about leaving...EVERYONE is being affected. I'm sure there are some who will consider moving out either by choice or by necessity. I lived in the City from 1984-1994 and applaud the life-style. Loved it and hope come back to visit all the time. Perhaps there are those who want to explore options outside of the City. The suburbs of New York, like Stamford and Norwalk, offer lots and lots of hi-rise options or low rise lofts at a fraction of the cost. Also, Darien, Greenwich, Fairfield, and Westport are all within an hour on the train and as of this morning, there were over 4000 houses, apartments or condos for sale or rent in thes towns. Certainly, there are a few residents who want to take control of their housing needs instead of continuing to be priced out of the lifestyle they desire. The suburbs isn't for everyone, but for those few, www.MikesCorner.com may be of some help.

rcltrh

Let it fail. You mean those $50K apartments from 10 years ago aren't worth a million now? I feel nothing but anger towards all the real estate investors who fuc*ed over this city in the past 10 years. Now no-one can afford to live here and still they are crying over their lost investment. A big FU to all of them who destroyed my city.

Trilby16

I'm sure this thing is too big to fail. Bailout!

But if you or I get into trouble, foreclosure, for sure.

Knickerbocker

The problem is also that:

"Daniel R. Garodnick, a city councilman" makes $112500/yr.

How do politicians with 6 figure salaries get to live in subsidized/stabilized housing?

I guess you call Charlie Rangel's graft hotline for advice - 800-ICANTAKE.

Tgirl

Garodnick lives in a market rate apartment, there are many on the complex, so rent stabilization laws (and benefits) do not apply to him. In any event, stabilized apartments have an income limit of 170,000 yr in order to be de-regulated. There are no "subsidized" units in this complex. That is another model altogether, and should not be confused with stabilized apts.

ed_Extinct

Copy error--- "Didn't forsee..."

(comments section needs "edit" button)

NannyState

When this acquisition was announced, who didn't think it was the stupidest real estate transaction they ever heard of? There can't possibly be any upside to buying a post-war complex that was so badly designed that it's commonly mistaken for a public hopusing project...unless you're in it for the steady rental income which means it only has value if it's listed for around $2 billion. Tishman Speyer should collapse, not just from this fuck up, but from their overall greed and idiocy.

ed_Extinct

Greed.

That's how economists, bankers, and real estate associates did forsee this collapse. I'm a designer and saw this shit coming years ago...

An effing joke!!!

Qraymond

As I recall Garodnick and the other local Electeds made a serious good-faith effort to acquire the complex, but were foiled because Tishman was so intent on buying it that it massively overbid.

Karmically speaking, Tishman is getting what it deserves but I hope this doesn't negatively impact the residents.

nicemarmot

I lived there during the purchase. It was ridiculous to the level of being a joke, and everyone who lived there knew it. We moved out 2 years ago this month - thank God. The buildings are aging and need maintenance that they aren't getting because the investors would rather spend money to make it look nice so they can up rents.

Tgirl

you're dead on. Greed is blinding, apparently. It will never be "luxury living," no matter how much lipstick they put on that pig.

mellow_fellow

Wow, might the City take it over and put the Housing Authority in charge?

longacre

That would be funny. The tenants think their current landlord is bad...

I highly doubt the city would have to take it over...it is still worth a lot of dough on the open market, just not as much as these schmucks paid for it. I don't think the city has the resources to do so if it wanted to.

JacqueMehoff

who thought they could turn this place into high market housing must be smoking crack. it was affordable housing for the people, nothing fancy like the poster above stated.

I lived in a mitchell lama project like this, it was well run, had a tenant's assoc., landscaped courtyard.

then some people got the idea that, hey, let's turn this brown bricked building into luxury housing stock.

Did those Singapore investors even looked at this place?

WesleySnipesAlot

"This asset is going to require restructuring" = "How long can we stall and dick our creditors out of their money?"

Rocknrope

Wow, I remember back in the day StuyTown was the shizznit - you couldn't get into that place unless a relative of yours dropped dead and willed it to you. How the worm has turned.

Tgirl

thats not exactly true, you had to get on a list and wait (sometimes for years) until your turn. It was worth it, because once you got in you had a great, nothing fancy of course, affordable apartment in a reasonably well-run complex. I know, because I got in by doing just that.

Now of course, the whole thing has been turned on its ear because TS made a really bad deal, MetLife got away with the equivalent of real estate grand larceny, and the tenants are left in the lurch.

MrManhattan

No Met Life got away with the ultimate example of "A fool and his money are soon parted". It's TS that will leave the tenants in a lurch.