The website, Multifamily Investor, is also watching the the debacle that is Tishman Speyer's failed venture into residential property. In less than three years Tishman Speyer has failed at reinventing the middle-class housing complex Stuyvesant Town, as "luxury living" and has settled for filling their vacant apartments with students from local colleges.Cash Crisis for America's Most Expensive Apartment Complex
Developer Tishman Speyer has nearly depleted a $650 million cash reserve needed to prop up iconic apartment complexes Peter Cooper Village and Stuyvesant Town, and thanks to an unresolved court case, can't replenish its coffers.
The real-estate developer led by Chairman Jerry Speyer has had to put its fundraising plans on ice because the properties' revenue potential is tied up in the legal battle.
Set up as a temporary cash cushion when Tishman and a group of investors bought the massive Manhattan apartment complex in 2006 for $5.4 billion, Tishman has tapped the reserve at a faster rate than expected to help cover day-to-day expenses, including payments on a $3 billion mortgage.
As of this week, there was just $49.6 million left, according to trade publication Commercial Real Estate Direct, and with Tishman tapping the reserve at an average rate of $11.3 million a month, it could be completely depleted by December.
Under normal circumstances, savvy, well-respected developers like Tishman would simply go out and raise more money, either through loans or by selling stakes to new investors.
But an unresolved court case that could affect its revenues from the property is crimping those plans, sources said.
In March, the Appellate Division of the State Supreme Court ruled that Tishman and other property owners improperly converted rent-stabilized apartments to market-rate prices while receiving special tax benefits.
On Sept. 10, the New York Court of Appeals will hear Tishman's appeal of the decision. But even if the courts ultimately rule in Tishman's favor, sources said a decision could take months.
And until Tishman can answer if and when it can convert the complex's apartments to market-rate units, investors are likely to stay away from any deals the developer tries to put together.
"It's a material risk," said one real-estate lawyer. Losing the case will have a "very, very, very, very material impact," and investors just aren't willing to take the chance, he said.
Tishman officials declined to comment, but people close to the firm said the developer and its investors are banking on the cash reserves lasting through at least March or April, giving them time to rebuild the cash coffers once the case is settled.
Of course, The appeals court could also decide to uphold the lower court's ruling, which may further impede fundraising plans.
"It would be a disaster," said an attorney, adding that the impact would be felt by all New York landlords, not just Tishman.
Source: Stuytown Cash Crisis, Kaja Whitehouse, New York Post, 8/22/09
Cash Crisis for America's Most Expensive Apartment Complex [Multifamily Investor]
I call BS. They can't refill their coffers because no one is stupid enough to give them money regardless of the case outcome.
Tishman-Speyer will spare no expense in keeping our customers ensconced in the luxurious lifestyle they so deserve. To date, we have spent over $600 million dollars on our various "Oval Amenities" designed to provide the ultimate Manhattan luxury environment for our residents. We see no reason why investors wouldn't be willing to continue to support this premier New York City property.
We hope you will visit Stuyvesant Town / Peter Cooper very soon to see to witness the incredible effort we spend to provide luxury while keeping our residents happy, informed and amused.
Tishman Speyer is to luxury what Paris Hilton is to class. And they don't find that funny, entertaining or helpful for their residents.
Saw this interesting comment from -Former City Official on a post from back in March on the NY Times City Room blog about the ST-PCV J-51 lawsuit:
The only opinions that matter are those of the seven judges on the NY Court of Appeals
It's starting to look like city officials under Bloomberg (and maybe under Giuliani too) deliberately looked the other way while landlords like ours decided to ignore the J-51 law. Here's more from that thread:
Finally there's this comment (from that thread too):
Funny that you have to search out this kind of info in comments on a weblog, instead of reading about it on the front page of the Post, Daily Newsw, or Metro section of the NY Times, huh?But then this is the kind of stacked deck tenants have had to put up with since Pataki.
I'm shocked, shocked to find there's gambling going on in here!
The Lord Mayor (for life) only cares about the middle class in phony ads when he is running for relection.
Welcome, Bud, or whoever you are.
For one, the NYT, the Post, the WSJ, Fitch, Moody's, etc., can't possibly all be wrong. Fitch and Moody rate the creditworthiness of corporations like Tishman-Speyer, and both have said TS has seen greener pastures in its past.
Stick to PR because you're certainly no good with economics. While TS may have spent $600m on 'amenities', the return on that investment is way, way down, as is the overall value of PCVST in general (again, see Fitch and Moody reports). It would be the same as me saying "Today my stock portfolio gained $100 since yesterday" when in fact my investments may actually be down $24k since this time last year.
And lay off the 'luxury' bit. I would call it more of a substitute for luxury. Any real luxury building/s would be 100% luxury, not mixed MR/RS. And real luxury apartments sell themselves without having to give away used MINI Coopers, 2 months free, no deposit, reduced concierge fees, and would DEFINITELY not be open to any ounce of college life- period- since those places run more rigorous financial background credit checks than ST. My old place required a salary of at least 40x the monthly rent on my old 1-bedroom of $2850; a friend just moved here from the other side of the world (literally) last month and took a 2-bedroom in the Oval with no credit history whatsoever. You know what I'm talkin' 'bout?
Hey! I'm a big fan of Perrone! Watch yourself.
;-)