Stuyvesant Town Returned to Creditors

[closeupready]

Source: New York Times

The owners of Stuyvesant Town and Peter Cooper Village, the iconic middle-class housing complexes overlooking the East River in Manhattan, have decided to turn over the properties to creditors, officials said Monday morning.

The decision by Tishman Speyer Properties and BlackRock Realty comes four years after the $5.4 billion purchase of the complexes’ 110 buildings and 11,227 apartments in what was the most expensive real estate deal of its kind in American history, Charles V. Bagli writes in The New York Times.

The surrender of the properties, first reported by The Wall Street Journal, ends a tortured real estate saga that saw the partnership make expensive improvements to the complex and then try to rent the apartments at higher market rates in a real estate boom. But a real estate downturn and the city’s strong rent protections hindered those efforts, leaving the buyers scrambling to make payments on loans due for the properties, which have been a comfortable harbor for the city’s middle class since they opened in the late 1940s.

“We have spent the last few weeks negotiating in good faith to restructure the debt and ownership of Stuyvesant Town/Peter Cooper Village,” said the statement by the partnership. “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.”

Read more: http://dealbook.blogs.nytimes.com/2010/01/25/huge-housing-complex-in-ny-returned-to-creditors/

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Walking away? Isn't there a moral hazard there? Why do corporations feel entitled to walk away from obligations, even as they lecture consumers out of the other sides of their mouths, "think about the lesson you are teaching your children!!"

[hobbit709]

1. It's only reprehensible when poor people do it.

Extreme :sarcasm:

Since these clowns tried to force people out of rent control apartments so that they could sell luxury condos to the highest bidder, here's what I have for them.

:nopity: :nopity: :nopity: :nopity:

[robcon]

2. Sounds like the defaults in Tokyo when their real estate boom collapsed.

n/t

[Me.]

3. I'm Glad They Were Forced Out

Their plan was based on 'aggressively' converting rentals into luxury apartments. Translation...forcing middle class people out of their homes by any means. The courts had already ruled that 200 mil in increases they charges were illegal/

[FarCenter]

4. Creditors include Florida State Board of Admin, California Public Employees’ Retirement System

The following is incomplete. The capital structure seems to have included:

$1.9 billion equity, including $112.5 million each from Tishman Speyer and BlackRock.

$1.4 billion mezzanine debt, incuding Gramercy Capital Corp. and a group led by Winthrop Realty Trust, which also includes Deutsche Genossenschafts-Hypothekenbank AG, a mortgage bank based in Hamburg; Hartford Financial Services Group Inc.; and Dublin-based Allied Irish Banks Plc.

$3.0 billion mortgage, from Wachovia which was packaged with other commercial-property loans and sold as securities. The biggest holders are Fannie Mae and Freddie Mac, the U.S. government-owned home-loan finance companies.

Others investors include Singapore Investment Corp., manager of more than $100 billion of the city- state’s foreign reserves; the Florida State Board of Administration, the California Public Employees’ Retirement System and the Church of England. The position of these investors in the capital structure is not clear, although the story on Bloomberg says that Florida has written its investment down to $0. So Florida must be either equity or mezzanine debt.

Extracted from http://www.bloomberg.com/apps/news?pid=20601087&sid=atzSKZKSUti4&pos=6

[caseymoz]

5. Maybe 11,000 units to house the homeless?

:sarcasm:

They'll tear them down first.

[robcon]

6. It doesn't affect the tenants.

I have a cousin, and a niece who both live in Stuyvesant Town apartments with their families. The best place to raise kids in Manhattan, IMO.

[caseymoz]

7. I thought they weren't able to fill most of them.

And that's the problem. It's true, the ones living there won't be effected, but as is, the apartments won't be profitable for the creditors either. What then?

There are a lot of people who want apartments, of course, but the rent still hasn't fallen to where those people can afford it.