When Tishman Speyer Properties and BlackRock Realty Advisors bought the sprawling, 11,200-unit Peter Cooper Village and Stuyvesant Town complex in Manhattan in late 2006, it received criticism on all fronts. Analysts and industry watchers wondered if the $5.4 billion price tag for the affordable housing development was too high, while tenants' rights advocates were up in arms about violations of rent-stabilization laws.
Well, it turns out both sets of fears may have been well-founded. This week, The Wall Street Journal, based on information from Fitch Ratings, reports that the owners have six months before they run out of the money needed to pay the complex's $3 billion mortgage.
"Everything was priced to perfection when that deal happened," says Dan Fasulo, managing director of Real Capital Analytics, a New York-based firm that tracks commercial real estate transactions.
The news comes two weeks after The New York Post reported that tenants at Peter Cooper and Stuy Town filed a $40 million class-action lawsuit against Tishman for trying to evict them unfairly. That followed a $1 million suit brought about by former property manger John Scott Walsh, who claimed the company fired him because he resisted claiming rent controlled units. For its part, the company said that Walsh was fired for complaints of lewd conduct.
Though the economy, especially in New York, has hurt Tishman, the inability to turn over the rent controlled units is one of the major reasons that the firm has had trouble, according to Fasulo. "They had unrealistic expectations of turning over this project [to non-rent controlled apartments]," he says.