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Clash of the Utopias

Rob Speyer and Paul Galiano, a Tishman Speyer senior managing director, joined Verrone aboard Wachovia’s Challenger jet and flew down to Charlotte. The executives gathered in a conference room and went over lists of potential investors. Rob assured the Wachovia bankers that Tishman Speyer would tap their network of investors and help move the bridge equity off Wachovia’s books. Afterward, Rob and Galiano hopped the Wachovia jet for the short flight back to Teterboro. Just as the plane was landing, the pilot pulled the jet back into the air, nearly clipping a helicopter. Passengers were told that the brakes had malfunctioned and they would need to divert to Newark to make an emergency landing. They were told to tie down any loose objects in the cabin and cinch their seat belts. Rob braced himself for the rough landing—but the plane managed to stop safely on the runway in Newark.

It was a scary time—but there are liable to be more of those. “This moment is scarier than post-9/11,” says Brian Ray, a former Tishman manager, about the real-estate market. “You don’t know what anything is worth anymore. Nine-eleven was scary, but the sun still went up in the east and went down the in the west. Today, it’s like, Where is this going?

Stuy Town, says one industry observer, is “too big to fail.” But Tishman Speyer is struggling to make its numbers. The company has stopped renovating apartments and has recently laid off 5 percent of the Stuy Town staff, say sources. Default cannot be discounted as a possibility, and in that case, investors would have to get into a room and sort out a meltdown. “This has never been tested before,” says a senior real-estate investment banker. Last week, when Rob was asked if he regretted doing the deal, he hesitated for a long while. But then the optimism of the real-estate man returned. “It is a very challenging market,” he said. “But we still believe in this property long-term.”


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