Via Next American City
Image via The Mannahatta Project
The biggest, most offensive real estate deal in history has gone belly-up! Tishman Speyer properties--along with BlackRock--has forfeited Stuyvesant Town/Peter Cooper Village to investors. They bought the historic 80-acre postwar housing development for $5.4 billion back in 2006, exactly 380 years after Peter Minuit bought the island of Manhattan from the Lenape for about $24 in wampum (actually, it was about $1,000). They are completely unrelated, aside from the fact that they may go down in history together as the worst real estate deals to ever happen, ever.
Tishman Speyer's failure stems not only from making a massive purchase immediately before the market tanked, though that didn't help; their other mistake was buying a housing project and expecting to be able to treat it exactly like any other luxury housing development. Not only is a housing project not as appealing as a condominium (we will get to that later)--but people already live there. Lots of them.
Tishman Speyer saw this as a mere bump in the road; their plan for raising enough revenue to pay back their massive loans--the purchase was 80% leveraged--was to turn rent-controlled apartments into market-rate apartments. Curious what a market-rate one bedroom costs in a former MetLife housing project just above the Lower East Side of Manhattan? $2850 a month. With more than 11,000 apartments in the two complexes, ranging from one to five bedrooms, Tishman was poised to make a lot of money. But, on top of a recession-generated lag in the rental market, the rent-controlled tenants filed suit against Tishman, arguing their actions were illegal, and actually won. Tishman Speyer's business model was ruined, and they are now forced to default on $4.4 billion in loans.
For anyone familiar with San Francisco current events, this is a cluster-site, New York-scale version of what happened with the Lembi group. This confluence really makes one wonder how many real estate investors got the capital for their highly-leveraged purchasing sprees by telling their investors they would boot rent-controlled tenants.
Continue reading Stuy-Town: Worst Real Estate Deal Since 1626! @ Next American City
Image via The Mannahatta ProjectThe biggest, most offensive real estate deal in history has gone belly-up! Tishman Speyer properties--along with BlackRock--has forfeited Stuyvesant Town/Peter Cooper Village to investors. They bought the historic 80-acre postwar housing development for $5.4 billion back in 2006, exactly 380 years after Peter Minuit bought the island of Manhattan from the Lenape for about $24 in wampum (actually, it was about $1,000). They are completely unrelated, aside from the fact that they may go down in history together as the worst real estate deals to ever happen, ever.
Tishman Speyer's failure stems not only from making a massive purchase immediately before the market tanked, though that didn't help; their other mistake was buying a housing project and expecting to be able to treat it exactly like any other luxury housing development. Not only is a housing project not as appealing as a condominium (we will get to that later)--but people already live there. Lots of them.
Tishman Speyer saw this as a mere bump in the road; their plan for raising enough revenue to pay back their massive loans--the purchase was 80% leveraged--was to turn rent-controlled apartments into market-rate apartments. Curious what a market-rate one bedroom costs in a former MetLife housing project just above the Lower East Side of Manhattan? $2850 a month. With more than 11,000 apartments in the two complexes, ranging from one to five bedrooms, Tishman was poised to make a lot of money. But, on top of a recession-generated lag in the rental market, the rent-controlled tenants filed suit against Tishman, arguing their actions were illegal, and actually won. Tishman Speyer's business model was ruined, and they are now forced to default on $4.4 billion in loans.
For anyone familiar with San Francisco current events, this is a cluster-site, New York-scale version of what happened with the Lembi group. This confluence really makes one wonder how many real estate investors got the capital for their highly-leveraged purchasing sprees by telling their investors they would boot rent-controlled tenants.
Continue reading Stuy-Town: Worst Real Estate Deal Since 1626! @ Next American City
again with the 'rent-controlled.'
Serious question...now with TS out of the picture...shouldn't all of their pending MCI applications also be voided by the city/state? They're no longer a valid party to the application process.
I think that's a bit of wishful thinking RichR.
Unless you can find language in the DHCR regulations to the contrary, it's more likely that the MCI application is tied to the property, not the owner. It doesn't make financial sense. If your scenario was true, owners would have to take a loss on renovations if they sold a property while waiting for an MCI approval.
NEW EMAIL being presently mailed. List is over.
hank you for your patience and interest - we are ready to assist you today! We offer a fantastic selection of one, two, three and five bedroom apartments.
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Starting prices:
Stuyvesant Town 1 bedroom - $2,395
Stuyvesant Town 2 bedroom - $3,165
Peter Cooper Village 1 bedroom - $2,713
Peter Cooper Village 2 bedroom, Stuyvesant Town 3 & 5 bedroom — Currently unavailable but please keep checking back with us for future availabilities.
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Actually...I'm looking at it this way...it's not the "property" that filed the papers, it was the then owner/manager, Tishman. And since the applications are still being appealed, who would be the party on the other side of the appeal, as Tishman no longer has standing to speak for ST/PCV.
Unless CW Capital takes up the fight...I think the pending applications might be tossed (but nothing says the new owner(s) can't re-file).
And as for owners taking losses when they sell...well, if they're selling while a process is underway and not completed...why shouldn't that be a potential problem?
RichR, you can look at it anyway you want, but those MCI charges aren't going away, just as rent stabilization doesn't go away if there's a change in ownership.
Per the Observer this evening: "Stuy Town Tenants Get to Keep Lowered Rents Until at Least June." http://www.observer.com/2010/real-estate/stuy-town-adjusted-rents-agreement-extended-june
The article also says that deposits in the escrow accounts for November and December, will either be directly refunded or applied to March rent.
Here's another NYT article from Sunday's Business section, which nicely summarizes the real estate debacle as it applies to rent-regulated housing: http://www.nytimes.com/2010/01/31/business/31gret.html?scp=1&sq=all%20those%20little%20stuyvesant%20towns&st=cse
Gotta stop reading so quickly--only tenants who moved out will get refunds. Those still here will get the Nov and Dec overpayments applied to March rent.
Thanks GreenGirl. This is good news. Looking forward to a much smaller March rent bill. Could use the money. Now, the one large issue left is the over $200 million in rent overcharges prior to November 2009.
Here's an article from the Times of London about the Church of England's loss. My favorite part: the comment from the guy who claims to be writing from five blocks from ST and yet describes the buildings as 6 stories high--right after saying "It's amazing that the CofE did did not have someone swing by first to look over the place before they put the money in..."
http://business.timesonline.co.uk/tol/business/industry_sectors/construction_and_property/article7002424.ece
"The new owners were convinced that they would be able to cover their costs by replacing low-income residents in the rent-stabilised apartments with affluent ones"...
Inaccurate but I like the spin. ;-)
As we all await word on who our new landlords will be, I would like to take this opportunity to thank TS...without them, I doubt that "cabbage" would be part of my 20 month old daughter's vocabulary.
Interesting article: "Mining Stuyvesant Town Disaster For Gold" in Forbes.
http://www.forbes.com/2010/01/25/stuyvesant-town-speyer-personal-finance-real-estate-advisor.html?boxes=financechannelforbes
Just saw a commercial on CNN from Gottlieb & Associates (lawyers). The spiel is that you may be paying too much rent and they'll get you a reduction at no cost to you unless they win. It turns out they're pursuing as clients tenants in buildings with J-51 abatements. Let the games begin.