'Tale of greed gone awry': Peter Cooper Village complexes
include 110 buildings and 11,000 apartments.
The biggest real estate deal in American history collapsed on Monday.
The owners of Stuyvesant Town and Peter Cooper Village, the iconic redbrick oasis of middle class affordability on Manhattan's East Side, said they are handing the massive property over to their creditors.
"It's a tale of greed gone awry," said John Cappelletti, a retired teacher who has lived in Stuy Town for 20 years and, like many tenants, is worried about what comes next for residents.
Jerry and Rob Speyer's ambitious plan to take over Manhattan's largest apartment complex began in 2006, when they partnered with BlackRock Realty to buy it for $5.4 billion.
They planned to make a fortune by transforming thousands of rent-controlled apartments into high-end luxury condos and charge then-soaring market rates.
Nearly 7,000 of the 11,227 apartments at the complexes are rent-regulated. Residents pay an average of $1,400 for a two-bedroom apartment.
The deal was seen as a symbol of how Manhattan was changing into a refuge for the rich, driving out middle class families.
But the 2008 economic swoon ravaged the value of the 80-acre property complex of 110 buildings - cutting it in half - and a judge blocked the raising of rents.
The court also ordered the developers to pay the tenants of about 4,000 apartments that were judged illegally deregulated about $4,000 each.
The new owners faced ferocious tenant opposition as well as a raft of legal obstacles. Rents collected did not cover the mortgage payments.
The end was clear when Tishman Speyer couldn't make a $16 million loan payment earlier this month for the properties.
The partnership also defaulted this month on $3 billion in debt on the properties.
Residents who had feared being priced out of their apartments still find themselves unsure what the future holds.
"Frankly, we don't know what will happen to us," said a six-year Stuyvesant Town resident who gave her name only as Christine. "With all the history of this complex, you don't want to seen anything bad happen to it."
"Everything is going to change," predicted Leigh Novog, 50, a 20-year Stuy Town resident. "All this is going to affect tenants and family life."
Novog said he still fears he might be forced to move.
"Where would I go?" he said. "I probably would be forced to move in with family or buy something. Neither of these is a nice option."
Carmen Isturic, 56, a waitress who has lived in Stuy Town for 16 years with her husband, mom, and 20-year-old son, said she is worried.
"I hope this mess doesn't make things worse. I couldn't afford to live anywhere else," she said.
Ratings firms have estimated that the value of Stuyvesant Town and its smaller adjacent property, Peter Cooper Village, where apartments are more spacious and rents typically higher, has dropped to under $2 billion - far less than the outstanding loan balance.
Over the last few days the owners said it became clear the only viable alternative to bankruptcy would be to transfer control and operation of the 80-acre area to lenders.
The two properties, which overlook the East River, have been home to generations of middle-class New Yorkers.
They were built over a bulldozed slum by Metropolitan Life for World War II veterans in the 1940s, and for decades have received tax breaks and other incentives in return for maintaining low rents.
Tishman Speyer, whose other properties include Rockefeller Center and the Chrysler Building, said it was committed to an efficient transition of the properties' operations and would manage them during that transition.
It hasn't been determined when the ownership transfer of the sister properties will take place and who specifically the new owners will be, spokesman Bud Perrone said.
Lenders will now be looking for new managers for the two complexes.
No comments:
Post a Comment
We appreciates all comments and fosters free speech, however, keep in mind that we have young readers who peruse our site. Having said that, please refrain from using profane language, and know that flaming will not be tolerated. Spam will not be tolerated.