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Tuesday, September 1, 2009
Florida Loses $250 Million Thanks to Stuyvesant Town/Peter Cooper Village
It's just getting worse and worse for investors who went along with Tishman Speyer and Blackrock in acquiring Stuy Town and Peter Cooper Village.
Florida’s pension lost $250 million it invested in Stuyvesant Town and Peter Cooper Village, Manhattan’s largest rental-apartment complex, the fund’s trustees were told.
“We are carrying that investment at zero because the market softened dramatically,” Ash Williams, executive director of the State Board of Administration, which oversees $121.9 billion of pension and other assets, told a meeting in Tallahassee today.
The SBA bought in 2007 its share of a limited partnership run by Tishman Speyer Properties LP and Blackrock Inc., owners of the property, said Williams, who was hired in October 2008.
Tishman and Blackrock acquired the 80-acre, 11,200-unit Stuyvesant Town and Peter Cooper complex for $5.4 billion in 2006 at what Williams called “the top of the market.” Their plan to convert 1,600 rent-stabilized units to market rates as residents vacated was stymied by rising unemployment during the worst economic recession since the Great Depression.
“Rents are not going up like they normally would, landlords are making concessions like free rent and people have not moved out at the rate anticipated,” said Williams, who came to the SBA after nine years as a managing director at Fir Tree Partners, a New York hedge fund.
Manhattan apartment rents fell as much as 10 percent in August from a year earlier, the Real Estate Group of New York said on Aug. 25. Vacancies are growing and tenants aren’t moving as the city’s unemployment rate climbed to a 12-year high of 9.6 percent in July....
“What’s going to happen to the investment?” Florida Attorney General Bill McCollum, a Republican running for governor in the November 2010 election, asked Williams.
“Is there potential for recovery? Yes,” Williams said. “Is it a strong possibility? No.”
Florida is a junior partner in the Tishman/Blackrock venture, Williams said, with an equity-only investment and none of the mezzanine debt held by senior partners. He said the equity stake “could be wiped out.”
“We’ve had an unfortunate experience, we regret it and we’re taking steps so it doesn’t happen again,” Williams said.
More at the above link.