NEW YORK—Owners of Manhattan’s huge 80-acre apartment complex have handed the keys to the creditors after the failure to pay their $16 million loan this month.
Tishman Speyer and BlackRock, joint owners of Stuy Town, will continue to manage the property until new owners are found, spokesman Bud Perrone said in a statement.
“We make this decision as we feel a battle over the property or a contested bankruptcy proceeding is not in the long-term interest of the property, its residents, our partnership or the City,” he said.
“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.”
The consortium of Tishman-Speyer and Blackrock bought Stuy Town late 2006 for $5.4 billion from MetLife, the original developers. A booming market and easy lending set the scene. But it was the financial promise of turning rent-controlled units into luxury apartments that was the driving factor for the high price tag, a Dec. 1, 2009, Deutsche Bank report said.
Three months after the purchase, a group of nine tenants sued the current and previous owners.
Both the current owners and the previous owners (MetLife) of the development were found to have illegally decontrolled and raised rents on thousands of their rent-stabilized units, in a court ruling on Oct. 22.
The Deutsche report said the court ruling effectively ensures that all units will be subject to rent-stabilization until 2017.
“However, the current owners have already renovated the units and incurred significant expenses in doing so,” the report said. “While all rental units will be subject to rent-stabilization going forward, units which were previously illegally decontrolled should be eligible to receive the appropriate amount of rent increases.”
Now, the value of the development is estimated to have dropped to $1.8 billion.
Billionaire investor Wilbur Ross told Bloomberg News that he is considering buying Stuy Town with partners including developer Richard LeFrak.
“We are not really capital-constrained, so we can put up whatever is needed,” Ross, 72, said in a telephone interview with Bloomberg. “We’re prepared to go all the way.”
Al Doyle, president of the Stuyvesant Town-Peter Cooper Village Tenants Association, said in a statement earlier this month that the loan default on Jan. 8 is “the sad, but inevitable result, of a predatory and speculative business plan designed to drive out long term tenants of a stable, middle-class community.”
Doyle said tenants are understandably concerned about what this means for the community and speculates the default is the first step in what will likely be a long legal process.
New York State Senator Thomas K. Duane urged the creditors to ensure the upkeep of the development. “The tenants’ quality of life must be ensured,” he said.
“As the State Senator who represents the residents of ST/PCV, I will be keeping careful watch to ensure that the new management of this critically important housing resource preserves the rights and well-being of the tenants.”
Stuy Town is the poster-child for the commercial woes hitting the country this year. Commercial property is set to struggle as billions of dollars of debt comes due in the next four years.
Steven Herman, partner at law firm Cadwalader, Wickersham & Taft LLP, said by 2013 experts at Harvard “were talking about $1.4 trillion of real estate debt that’s going to mature.”
Tishman Speyer and BlackRock, joint owners of Stuy Town, will continue to manage the property until new owners are found, spokesman Bud Perrone said in a statement.
“We make this decision as we feel a battle over the property or a contested bankruptcy proceeding is not in the long-term interest of the property, its residents, our partnership or the City,” he said.
“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.”
The consortium of Tishman-Speyer and Blackrock bought Stuy Town late 2006 for $5.4 billion from MetLife, the original developers. A booming market and easy lending set the scene. But it was the financial promise of turning rent-controlled units into luxury apartments that was the driving factor for the high price tag, a Dec. 1, 2009, Deutsche Bank report said.
Three months after the purchase, a group of nine tenants sued the current and previous owners.
Both the current owners and the previous owners (MetLife) of the development were found to have illegally decontrolled and raised rents on thousands of their rent-stabilized units, in a court ruling on Oct. 22.
The Deutsche report said the court ruling effectively ensures that all units will be subject to rent-stabilization until 2017.
“However, the current owners have already renovated the units and incurred significant expenses in doing so,” the report said. “While all rental units will be subject to rent-stabilization going forward, units which were previously illegally decontrolled should be eligible to receive the appropriate amount of rent increases.”
Now, the value of the development is estimated to have dropped to $1.8 billion.
Billionaire investor Wilbur Ross told Bloomberg News that he is considering buying Stuy Town with partners including developer Richard LeFrak.
“We are not really capital-constrained, so we can put up whatever is needed,” Ross, 72, said in a telephone interview with Bloomberg. “We’re prepared to go all the way.”
Al Doyle, president of the Stuyvesant Town-Peter Cooper Village Tenants Association, said in a statement earlier this month that the loan default on Jan. 8 is “the sad, but inevitable result, of a predatory and speculative business plan designed to drive out long term tenants of a stable, middle-class community.”
Doyle said tenants are understandably concerned about what this means for the community and speculates the default is the first step in what will likely be a long legal process.
New York State Senator Thomas K. Duane urged the creditors to ensure the upkeep of the development. “The tenants’ quality of life must be ensured,” he said.
“As the State Senator who represents the residents of ST/PCV, I will be keeping careful watch to ensure that the new management of this critically important housing resource preserves the rights and well-being of the tenants.”
Stuy Town is the poster-child for the commercial woes hitting the country this year. Commercial property is set to struggle as billions of dollars of debt comes due in the next four years.
Steven Herman, partner at law firm Cadwalader, Wickersham & Taft LLP, said by 2013 experts at Harvard “were talking about $1.4 trillion of real estate debt that’s going to mature.”
