Via GlobeSt.com
By now the tale of the failed Stuyvesant Town/Peter Cooper Village deal is well known. Bought for a record $5.4 billion in 2006 by a JV of Tishman Speyer and BlackRock Realty, the 110-building, 11,200-plus-unit residential property is one of Manhattan's premier residential complexes.
Yet the economy and legal challenges threw a kink into the buyers' plan to bring the complex's units from stabilized to market rates. As a result, the property's cash flow remained too low to cover debt-service obligations. By year-end 2009, the Tishman-BlackRock JV had not only gone through its $400-million debt-service reserve but also a nearly $200-million general reserve.
What was to be the final blow came when the New York State appeals court ruled that the JV and its predecessors had improperly deregulated and raised rents on thousands of units at the complex. Not only was the further conversion of more units halted, but the court also found that the tenants were due some $215 million in rent rebates.
Now valued at some $1.8 billion--a 67% decline from its price at the peak of the market--the property was severely underwater on its mortgage. In January, the Tishman-BlackRock JV said it would be handing the keys to the complex back to the lenders after being unable to negotiate a restructuring of its debt that would maintain its ownership. The ownership stake was also why Tishman bowed out of managing the property; special servicer CWCapital has since hired local firm Rose Associates.
Calls made to CWCapital were not returned. BlackRock deferred comments to Tishman, which would not comment beyond its Jan. 25 joint statement announcing its intention to transfer control of the complex to its creditors.
Continue reading "The First of the Worst" @ GlobeSt.com
By now the tale of the failed Stuyvesant Town/Peter Cooper Village deal is well known. Bought for a record $5.4 billion in 2006 by a JV of Tishman Speyer and BlackRock Realty, the 110-building, 11,200-plus-unit residential property is one of Manhattan's premier residential complexes.
Yet the economy and legal challenges threw a kink into the buyers' plan to bring the complex's units from stabilized to market rates. As a result, the property's cash flow remained too low to cover debt-service obligations. By year-end 2009, the Tishman-BlackRock JV had not only gone through its $400-million debt-service reserve but also a nearly $200-million general reserve.
What was to be the final blow came when the New York State appeals court ruled that the JV and its predecessors had improperly deregulated and raised rents on thousands of units at the complex. Not only was the further conversion of more units halted, but the court also found that the tenants were due some $215 million in rent rebates.
Now valued at some $1.8 billion--a 67% decline from its price at the peak of the market--the property was severely underwater on its mortgage. In January, the Tishman-BlackRock JV said it would be handing the keys to the complex back to the lenders after being unable to negotiate a restructuring of its debt that would maintain its ownership. The ownership stake was also why Tishman bowed out of managing the property; special servicer CWCapital has since hired local firm Rose Associates.
Calls made to CWCapital were not returned. BlackRock deferred comments to Tishman, which would not comment beyond its Jan. 25 joint statement announcing its intention to transfer control of the complex to its creditors.
Continue reading "The First of the Worst" @ GlobeSt.com
