Tishman defaults on huge Stuy-Town loan

[FarCenter]

Tishman Speyer and partners run out of cash to meet required payments in connection with their 2006 purchase of the vast Manhattan residential complex.

Friday’s announcement by the Tishman Speyer partnership that it was defaulting on the on the mortgage that paved the way for the $5.4 billion acquisition of Stuyvesant Town and Peter Cooper Village was long expected. But sorting out the future of the sprawling Manhattan residential development has only just begun.

Tishman Speyer and BlackRock, the lead partners in the venture that owns the complex was roughly 11,000 apartments, said they would not make the full service payment due. However, they the failure to pay would have no immediate impact on tenant services or operations.

Loans on the complex were handed over to a special servicer two months ago in advance of the expected defaults. Special servicers work with owners and lenders to find solutions for financially troubled loans. Aside from a $3 billion mortgage, there are $1.4 billion in secondary loans and nearly $1 billion invested by the original equity partners.

“The special servicer will continue to work with the borrower to come up with a resolution,” said Adam Fox, senior director of Fitch Ratings, in a statement.

That byzantine financing structure means it will likely take months to sort out a solution that is amendable to the numerous parties involved. There's also a political element to the saga because the complex is one of the last bastions of affordable housing in the city, and there is keen interest among elected officials to protect the rent-regulated tenants who live in the building.

<SNIP> http://www.crainsnewyork.com/article/20100108/FREE/100109924

[frazzled]

1. Oh, wow, interesting

I knew quite a few people who grew up in Stuyvesant Town.
My son had a university-subsidized apartment there for his first year in grad school. I wouldn't say it's that "affordable": even with a subsidy, he and another student paid $1000 each to share a 480-ft. space. I think he said the market rate would have been $3,000. That was just before the bubble burst and the economy tanked, so maybe it was at the height of rents for Stuy-Town.

[FarCenter]

2. A lot of people live there in rent-controlled apartments for a lot less

But $3000/month doesn't sound out of line for a nice 1 br at the market peak.

[frazzled]

4. I had a rent controlled apartment many years ago in NYC ... (eat your heart out)

for which I paid $68 a month. It was between Houston and Prince on Thompson Street. This was back in 1970 or so, and it was not entirely a kosher situation. I sublet it from a guy who had moved to Chicago and sent him the rent every month, which he turned around and sent to the landlord. After a while, I just sent the check to the landlord directly, and no one ever questioned it. Gee, how I wish I'd held on to that place all these years!

[BurtWorm]

5. Ouch!

My heart got eaten out!

[Liberal_in_LA]

3. Watched a documentary on the development of those apartments...really interesting