Rather than endure a painful and protracted foreclosure process, owners Tishman Speyer and BlackRock have turned over the massive Peter Cooper Village and Stuyvesant Town apartment complex to creditors, who loaned the over $4 billion the pair collected for the purchase in 2006. At that time, the $5.6 billion total price tag made the sale the most expensive in residential real-estate history. But Tishman and BlackRock didn’t put in much of their own money — according to The Wall Street Journal, Tishman, for example, only put up $112 million. Now the complex is estimated to be worth only $1.8 billion, and earlier this month, the owners began defaulting on debt payments. “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,” the owners told the Journal.
“We make this decision as we feel a battle over the property or a contested bankruptcy proceeding is not in the long-term interest of the property, its residents, our partnership or the city,” the statement continued. Tishman will also “not consider a long-term management contract to continue operating the property that does not involve ownership. Without a restructuring that would keep our ownership group as part of the equity, we felt it best that the new owners install a new management team.” The developers had collected at least $10 million in property-management fees since the purchase, but last year had begun to manage the property for a loss. Now investors and creditors, like the government of Singapore, Florida, and California state pension plans, and the Church of England, face not only investments that are worth nearly nothing, but the prospect of figuring out what to do, and how to manage, this elephant of the East Side.
Tishman Venture Gives Up Stuyvesant Project [WSJ]
Related: For the entire backstory of Tishman Speyer and Stuyvesant Town’s disastrous marriage, read Gabriel Sherman’s article from New York last year.