Now that Stuy Town's rent-overcharge legal battle has finally been resolved, many assumed that CWCapital Management, the company that controls the complex on behalf of bondholders, would want to rid itself of Stuy Town as quickly as possible. But that's not quite the plan. The Journal reports that CW wants to make a little more money off of the 11,200-unit development before putting it on the block to ultimately get a better sale price. An independent appraiser put the value of the complex somewhere between $3.25 and $4 billion. CW plans to boost operating income by doing the one thing that tenants feared the most: raising rents. They've already been doing this by converting vacant below-market-rate units into luxury units. A luxury two-bedroom can fetch more than $3,800 a month, while a regulated units goes for half that. Stuy Town is currently 99 percent occupied, and its net income should be somewhere between $160 to $170 million, up from $135 million in 2010.
When it comes time to sell, likely next year, CW is apparently planning for a widely marketed sale that would go to the highest bidder. This raises even more concerns about affordability, as that kind of sale would put pressure on the new owner to raise rents. Before MetLife sold the complex in 2006, officials wanted MetLife to accept a lower bid that would keep the complex affordable for the middle class. Instead, MetLife sold to Tishman Speyer for a whopping $5.4 billion?the most ever paid for a U.S. property. We all know how that turned out. Meanwhile, tenants are hoping, once again, that CW will sell the property directly to them.
· Stuyvesant Town Strategy [WSJ]
· Stuy Town coverage [Curbed]