From Reuters:
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.
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From Bloomberg.com this addition:
Broader Agreement
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.
Ned Steele, a spokesman for a law firm representing tenants, and Bud Perrone, a spokesman for Tishman Speyer, declined to comment beyond the joint statement.
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All of this is historic for New York City and affordable housing.
I love the no comment, once again, from Bud Perrone.
17 comments:
Bud Perrone doesn't have much to say when the chips are down! What a bunch of clowns these Tishman Speyer/Rubenstein losers are!
This is just the beginning of the boondoggle, and the opportunity for Tishman to make sure that those newly "stabilized" rents remain sky high.
In fact, what Roberts has brought is a temporary stop to Luxury Decontrol for recipients of J-51 abatement's, a situation that will be fought mightily in Albany as the Real Estate Lobby pours tons of money into influencing legislation that will negate this decision. This will happen very quickly, even before rent stabilization laws are considered for renewal in 2011.
I'm still lying awake at night waiting for the other shoe to drop on this.
The Real Estate lobby just can't decide
to overturn a court ruling. Yes, they can try
to let the stabilization laws sunset in 2011,
but they cannot undo Roberts.
I agree totally with poster #2. We really have to worry about the RS laws sunsetting in a couple of years and even worse assaults on rent regulations by the landlord cabal. Tishman Speyer has demonstrated the greed and ruthlessness of their kind so now we renters have to demonstrate how totally we will fight the bastards and not give up. Roberts is only one shot across the bows; now we have to really be prepared for the war.
I'm an RS tenant and I don't really understand what this "rollback" means. I've been reading posts on the LL board (ignoring the hate posts people put there) and from what I can tell, the MR tenants are not very happy with their reductions. Seems the reduced rents are nowhere near what they would have been if TS hadn't "renovated" the apartments and illegally removed them from stabilization. I wonder how the people who were on the waiting list for rent stabilized apartments before MetLife abolished said list feel about all this? There's something that doesn't smell right about this whole business.
If TS comes out ahead on this (meaning the new "affordable" RS rents for previous market rate tenants remain almost the same), then the lawyers for the tenants have been scammed. Can you imagine if some previous MR tenants will actually pay more now???
Do the former MR tenants pay for MCIs and air conditioning?
"The Real Estate lobby just can't decide to overturn a court ruling... they cannot undo Roberts."
Oh yes they absolutely can. In the "Roberts" ruling the appeals court justices specifically said that defendants were free to seek "legislative relief" from the rule that binds J-51 recipients.
The legislature can affect this decision and you can bet that big dollars are headed their way to try and influence Senators to favor the RE lobby.
Hey, ST Reporter: I don't think there is any way that TS can benefit from this. They can't raise rates. Existing tenants will pay the lower of market or RS. That's pretty obvious and I don't think it's right to make inflammatory statements to the contrary as there seem to be so many people that have no idea about what is going on. Frankly, It's amazing they can write (physically & financially) the checks necessary to live here.
And, as a follow up to our discourse on the VSO, here's what happened to the UHO today:
http://gothamist.com/2009/12/15/united_homeless_organization_shut_d.php
The VSO is next. They use the same model--they just haven't gotten as much press yet. Yet....
If the new RS rents of previous MR apartments are going to be high, say, about $2,500 for a one bedroom, I don't see how this will be a victory for affordable housing in Manhattan. Basically, while TS will be locked into rent stabilization for these apartments, the company will be receiving near what they were before for them. I await to hear how this all pans out, and what previous market rate tenants will now be paying for RS affordable housing. And whether they will be happy campers with this victory.
Hey, how did I know that you wouldn't post my reply until you posted one of your own?!?
Fair enuf.
The way I see it is there is no free lunch here. The people that could have been otherwise dislocated by these jack-booted thugs are now safe, at least for the time being. And those that showed up for the granite counter tops and the wine fridges will no longer be subject to 33% annual rent increases at someone else's whim.
And let's not forget the impact on TS. While they may have only lost $100 million on their equity slice (or maybe nothing once you net out the exorbitant fees that they have/will extracted from their mismanagement of the place), the black eye they gave themselves will likely cost themselves significantly more. Private equity, pension funds, foreign governments and other fiduciary entities now see them for the greedy, ignorant and--most importantly--vulnerable and fallible f-cks that they are.
That is the real victory.
We can only hope that they are run out of town like the snake oil salesmen that they are.
Anonymous 5:14 AM seems to be losing sleep over "people who were on the waiting list for rent stabilized apartments before MetLife abolished said list". Whats that all about?
Just a note: I post all comments when I log on (every once in a while), and then respond to them at the same time if I have anything to say. I don't hold onto to comments after logging on. People just have to wait--usually not too long, I hope--before they see their comment up.
Better or worse, the 'other guy' puts them up right away.
No offense.
Differ'nt strokes for differ'nt folks!
I'm OK with that...
The "other guy" doesn't have administrator comment approval kicking in! You post, your post appears unless there's a glitz in the system. And he could be sleeping.
glitch
"Glitch" it is!
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