That's the most shocking bit of intel from Charles Bagli's hot-off-the-presses examination of Stuyvesant Town's financial woes. Purchased at the height of the real estate boom by a group of investors led by real estate giant Tishman Speyer for a record $5.4 billion, the 110-building Stuy Town/Peter Cooper Village rental complex is now valued at just $2.13 billion by a credit rating agency?shattering the hearts of Floridians. And as Tishman Speyer burns through its cash reserves trying to make debt payments (experts say the funds will run out at the beginning of 2010), finding a solution for its Stuy Town problem won't be easy.
Many experts have said they expect Tishman Speyer to just pump some of its own cash into the complex, but Rob Speyer tells Bagli the situation has gone beyond the need for a cash infusion. "The asset is going to require a restructuring. Once the court case is resolved, we''ll speak to our debt holders as well as our fellow equity investors." Oh yeah, the court case! Over 60% of ST/PCV's 11,227 apartment remain rent regulated, and about 4,000 market-rate units may soon become regulated once again if Tishman Speyer loses an appeal scheduled to be argued tomorrow. Plus, the company could be forced to refund hundreds of millions of dollars in rent overcharges if the court rules it improperly deregulated apartments while receiving tax breaks.
Stuy Town's woes have drawn the attention of city officials who are worried about the iconic middle-class enclave slipping into disrepair. The city's housing commissioner tells the Times, "We are looking at how we can ensure that the rent-stabilized units and the families that live there and families that could live there in the future could be insulated from the unwinding of this deal." And don't cry for Tishman Speyer, which only put $56 million of its own money into the deal. According to patriarch Jerry Speyer, the firm is still providing investors with 20 percent returns and has $2 billion to play with for new deals. Maybe he can sell Stuy Town to himself?
· Buyers of Huge Manhattan Complex Face Default Risk [NYT]
· Stuy Town coverage [Curbed]