Commercial Real Estate Direct Staff Report
The value of Manhattan's Stuyvesant Town and Peter Cooper Village apartment complex might have been dealt a fatal blow.
New York State's Court of Appeals has ruled that the property's current owner, a venture of Tishman Speyer Properties and BlackRock Realty, as well as its previous owner, Metropolitan Life Insurance Co., should not have been able to move individual units out of the city's rent-stabilization roster, thus allowing them to charge higher, market-rate rents.
The court said it did not consider whether its ruling should be applied retroactively, so it's not clear whether the number of units that are now generating market-rate rents will change.
The result is devastating, not only for the property's owner, which bought it for $5.4 billion in 2007, but for investors who hold bonds from the five CMBS deals that own $3 billion of senior debt on the property, which has a total of 11,227 units. Another $1.5 billion of mezzanine debt is also outstanding, much of which has already been written down sharply or to zero. Some of its holders include Gramercy Capital Corp., SL Green Realty Corp. and Hartford Financial.
Among those that made substantial equity investments in the property are Florida's State Board of Administration, which had a $250 million equity piece that it has written down to zero, and the California Public Employees' Retirement System, which put up about $500 million of the deal's $1 billion equity.
Realpoint in recent months had valued the property at $2.1 billion. But that value had assumed that the 4,440 units that...
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