Via The Real Deal:
"Will Tishman buckle?
A blue-chip firm braces for the downturn
By Adam Piore
With credit markets frozen and property values slumping, real estate firms that soared the highest during the boom now appear poised to fall the farthest.
Certainly, few have looked down from as lofty a perch in recent years as Tishman Speyer, the venerable blue-chip firm that has long held a stake in such New York City landmarks as Rockefeller Center and the Chrysler Building.
Firmly established as the city's best in class, Tishman Speyer expanded its empire even wider during the boom, most notably by beating out scores of bidders in 2006 to acquire the iconic 80-acre Stuyvesant Town and Peter Cooper Village complex for $5.4 billion, the priciest deal ever for a single real estate property in the U.S.
It was just one of several coups. In 2007, Tishman partnered with Lehman Brothers to acquire the massive $22 billion nationwide portfolio of buildings owned by Archstone Smith -- one of the largest real estate deals ever.
Tishman completed its hat trick in March of this year, when the Metropolitan Transportation Authority awarded the firm the right to buy Manhattan's largest swath of undeveloped land: the West Side rail yards, which run from 30th to 33rd streets between 11th and 12th avenues. For a time, it seemed Tishman Speyer could do no wrong.
But now, it appears that even this company is paying a price for success."
Will Tishman Buckle? [The Real Deal]
An interesting article, but go-go Robbie or whomever is involved in managing ST needs micro-managing as incompetence reigns.
Let's take up a collection for the poor dears and use Zimbabwe currency.
Very interesting article. Thanks for posting it, Luxie. I see there is an opportunity to comment on the Real Deal website. I don't trust myself though. I can't contain my rage at these sharks. I want them dead.
Okay, Tish-Spy purchased StuyTown and PCV for $5.4 billion using mostly Other People's Money, based on their reputation as managers of iconic [much overused word these days] properties. They purchased at the top of the market and issued bonds to spread the risk. The ratings agencies believed the business plan, which said they were going to kick out the rent-controlled and rent-stabilized tenants forthwith. Thus, the bonds got a high rating in that bubbling market, even though then current income from the properties indicated that only a purchase price of $3.5 billion would yield sufficient income to cover the debt service. The business plan has since failed because it overestimated the numbers of illegal tenants lurking here and Tish-Spy's ability to turn over the apartments to market rate. They are blowing through their cash reserves. The value of the properties has declined by 10%, and the bonds have been devalued. Plus, the economy has gone into recessed. Bad news for Tish-Spy, right? Well, if you read to the bottom of the Real Deal article, it seems that Tish-Spy can now buy those devalued bonds and somehow come out ahead in the end by picking up their own devalued debt. Am I misinterpreting? Does anyone else's hair hurt?
With the election of Obama and the inspirational message that he gives, perhaps we can begin to say to the oligarchs of greed, Speyer, Bloomberg et al-
NO YOU CAN'T!!!!!!!!!!!
I hope these greedy weasles are squirming now that Obama has been elected and the Democrats have control in Albany.
Too bad the newspapers recently reported about the "sudden" increase in donations from major real estate interests to Gov. Paterson and other Dems in Albany. I don't have much more faith in them than I have in the Republicans , although I certainly hope I am wrong.
The idea of an "inclusive" America espoused by Barack Obama was undermined today with Propostion 8 passing in California.
Where is Lux?
Cold....so cold...so very cold...No heat. Not in days and days. So very cold. This is hell frozen over.
That photograph just screams "DEPRESSION!" I think it reflects the mood of a lot of the tenants in StuyTown.