StuyTown Keeps Extending and Pretending
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As expected, the Tishman Speyer and BlackRock JV that claims "ownership" of Manhattan's Stuyvesant Town / Peter Cooper Village mega-community failed to make a payment on their debt service last week, which basically amounts to a a default on the $5.4 billion deal currently held in special servicing by Needham, Mass.-based CWCapital. In a press release, Tishman Speyer and BlackRock said failure to make the payment would have no immediate impact on tenant services or the day-to-day operations of the community. The key words there are "immediate" and "day-to-day," as in the present moment where basically no one knows what to do with this deal as it winds itself irrevocably toward collapse.
Mezzanine lenders are reportedly wiped out, the JV is obviously tapped for cash, and OMG buyer beware of a property locked in a battle with a tenants group winning round after round of legalities that are pulling the community's 11,250 units across 56 buildings further and further away from market rate rents. "The whole deal was so highly leveraged and there's not much equity left, if any," says Amy Shane Silver, an attorney for New York City-based Golenbock Eiseman Assor Bell & Peskoe who is not connected to any of the StuyTown parties. "But at the same time is just does not seem like the lender wants to take the project on and foreclose."
While there's plenty of distressed asset acquisition capital out there, it's unclear if there is one entity that has enough capital to take over the StuyTown deal, particularly with the possibility of additional liabilities being owed to the tenants." Silver, for one, doesn't see how a workout gets done on Stuyvesant Town. "It's just such a huge property and a huge amount of money. This deal is the poster child for the complexities of working out multi lender deals that are now in special servicing, and I think there is probably going to be some more extending and pretending before it is ever resolved."
Have an inside track on StuyTown or just an opinion on how the deal does or doesn't work out? What about thoughts on how doomed deals might effect regional debt underwriting or even rent fundamentals? Email me and let me know.