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."