Four years after buying the middle-class housing complex in what was deemed the most expensive deal in real-estate history, the owners of Stuyvesant Town/Peter Cooper Village are giving it over to their investors. Tishman Speyer and BlackRock Realty bought the 11,227 apartment development in 2006 for $5.4 billion, but since then its value has decreased to a third of that, estimates the Wall Street Journal. Facing bankruptcy, the real-estate giants see no option but to hand the keys to their investors.

Tishman Speyer and BlackRock Realty bought the complex—which is so huge it has its own newspaper—in more optimistic times, four years ago at the height of the housing bubble. Their gutsy plan was to convert the rent-regulated middle-class development into luxury units that would be sold off at a big profit. But as the seller's market for residential real-estate screeched to a halt, they had trouble keeping up with payments. Tenants protested rent hikes and a state court ruled that $200 million extra the partnership had demanded from its 25,000 occupants was unlawful. The owners were deep in the hole.

Now, after failing to make a $16 million loan payment earlier this month, Tishman Speyer and BlackRock are washing their hands of the blighted property. “We have spent the last few weeks negotiating in good faith to restructure the debt and ownership of Stuyvesant Town/Peter Cooper Village,” the partnership explained in a statement. “Over the last few days, however, it has become clear to us through this process that the only viable alternative to bankruptcy would be to transfer control and operation of the property, in an orderly manner, to the lenders and their representatives.”

Those investors—who include the California Public Employees' Retirement System, a Florida pension fund and the Church of England!—will have to decide what to do with the failing development, and they'll resort to extreme measures. One group that includes Concord Capital said it will pursue "its rights and remedies," including possibly moving to foreclose on the property within 2 to 3 months.