Rents Down 25% from Peak

Rob and Jerry Speyer in far happier times. Their deal for ST/PCV is now called "a poster child for all that was wrong with that era of easy credit, highly speculative deals and greed." Congratulations on your wonderful stewardship of this property, Rob and Jerry!

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Rents in ST/PCV Down 25% from Peak

So states the NY Times in today's article about the money troubles for Tishman Speyer and BlackRock via their Stuyvesant Town/Peter Cooper Village property. The full two-page online article rehashes much that we've read before, with some extra titbits and some new quotes from Rob and Jerry about their failed venture.

http://www.nytimes.com/2009/09/10/nyregion/10stuy.html?hp

Here's a bit more meat from the article:

Regardless of that outcome, Stuyvesant Town and Peter Cooper Village are in trouble. City officials have been monitoring the looming crisis and how it might affect a complex that has served as an oasis of affordability in Manhattan for middle-class New Yorkers. Some 6,875 of the 11,227 apartments at the complexes are rent regulated.

“We are absolutely keeping an eye on it,” said Rafael E. Cestero, the city’s housing commissioner. “It’s an iconic complex.”

“We’re not doing this to bail out anybody who was part of the original transaction,” he added. “Those folks are going to take their lumps. 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.”

Even with the partnership’s financial problems pointing to a possible default, tenants would not be likely to face high rent increases or eviction, but they may face a period of deferred maintenance and disinvestment.

Rob Speyer, who is co-chief executive of Tishman Speyer Properties with his father, Jerry, acknowledged the problems went beyond the need for a cash infusion from the partners and their investors, which include Calpers, the giant California pension fund that is the nation’s largest.

“The asset is going to require a restructuring,” he said. “Once the court case is resolved, we’ll speak to our debt holders as well as our fellow equity investors.”

Tishman Speyer and BlackRock spent $6.3 billion — the $5.4 billion purchase price and the creation of four reserve funds totaling $890 million — to buy Stuyvesant Town and Peter Cooper Village from the original owner, Metropolitan Life.

The deal has become a “poster child” for all that was wrong with that era of easy credit, highly speculative deals and greed, said Ben Thypin, an analyst at Real Capital Analytics, a research firm.

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Now the buyers are running out of time and money. Jerry I. and Rob Speyer and their partner, BlackRock Realty, who paid $5.4 billion for the quiet middle-class redoubt near the East River, have seen the property lose more than half of its value, and the income from rent — down 25 percent from its peak — covers less than half of their debt payments.