NEW YORK (Reuters) - The landlord and tenants of a vast New York City apartment complex have reached an interim rental agreement for 4,000 apartments hit with illegal rent increases, attorneys for the two sides said on Monday.
The interim deal affects apartments whose rents were raised to market levels from rent-stabilized levels in Stuyvesant Town and Peter Cooper Village, which were bought for $5.4 billion in 2006 by a joint venture of commercial real estate owner Tishman Speyer and the real estate arm of money manager BlackRock Inc.
The interim deal covers just January and February rent, but the two sides agreed to hire an independent third-party expert to determine a longer-term stabilized rent level.
The case has been closely watched in the New York property industry because other buyers of rent-stabilized apartment buildings planned to follow the same investment strategy of increasing rents to market levels.
New York's top court ruled on October 22 that rents on some rent-stabilized apartments had been raised illegally to market levels. The high court sent the case to back to the trial court to decide issues such as damages and rent levels.
To resolve the case out of court, the two sides have been negotiating a host of issues, including setting stabilized rent levels, control of the escrow account holding rent increases paid since March, damages, and identifying who would be eligible to participate in a class-action lawsuit against the landlord and the former landlord, MetLife Inc.
The iconic properties encompass 80 acres, 52 buildings and more than 11,000 apartments on the east side of Manhattan.
The tenants sued after the landlord announced plans to bring rents up to market levels and sell units as condominiums.
The properties have lost about $3 billion in value since they were acquired in 2006, mainly because of the U.S. commercial property bust, experts have said.
The two sides said in a joint statement that they had also reached agreement on a more inclusive, six-month pact covering "a wider range of unresolved issues." These include giving the tenants control over the escrow account and settling on the composition of the class in the class action. It did not address possible damages resulting from the ruling against the landlords.
The six-month agreement is contingent on consent by CWCapital, the special servicer acting on behalf of the property's senior lenders.
BlackRock shares were down 69 cents to $225.32 in afternoon trading.
From Bloomberg.com this addition:
Current and future tenants will also be treated as rent stabilized.[Emphasis mine.]
Tishman and BlackRock also said today they reached “a more inclusive, six-month agreement covering a wider range of unresolved issues beyond those addressed in the interim agreement.”
That agreement would extend rent adjustments to June. It needs to be approved by CWCapital, the special servicer of loans on the complex, the statement said.
All of this is historic for New York City and affordable housing.
I love the no comment, once again, from Bud Perrone.