Big Bust: Tishman Speyer and Blackrock Give Up on StuyTown
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Surprise, surprise. In a statement released this Monday, the JV ownership group of Tishman Speyer and BlackRock Realty officially cashed in its chips on Stuyvesant Town Peter Cooper Village, which now becomes the largest multifamily deal failure in history. The Tishman/BlackRock JV was negotiating as late as this weekend to negotiate a workout on the 11,250 unit community they paid $5.4 billion for in 2006. “Over the last few days, however, it has become clear to us through this process that the only viable alternative to bankruptcy would be to transfer control and operation of the property, in an orderly manner, to the lenders and their representatives,” noted spokesperson Bud Perrone in a statement released to media late Sunday evening.
Tishman and BlackRock had been attempting to retain ownership (and thus preserve an equity stake in the deal) via loan workouts, a possibility that lenders apparently were not willing to bite on. As noted here in the Multifamily Trenches earlier this month, the JV was not making payments on its debt servicing as the deal progressed toward an irrevocable collapse. “We have spent the last few weeks negotiating in good faith to restructure the debt and ownership of Stuyvesant Town/Peter Cooper Village. It was our hope in these discussions that our partnership would remain as part of the long-term ownership,” Perrone said in the statement. “Tishman Speyer would not consider a long-term management contract to continue operating the property that does not involve ownership. Without a restructuring that would keep our ownership group as part of the equity, we felt it best that the new owners install a new management team.”
The impact of the StuyTown deal failure on Manhattan multifamily real estate and beyond will likely be far reaching. Already a tenants group has filed suit against owners of the 1,700-unit Lenox Terrace complex in Harlem, alleging that 200-300 apartments have been unlawfully removed from rent control. Attorneys in that suit point specifically to the New York State Supreme Court's decision that StuyTown similarly and unlawfully deregulated rent control apartments while receiving J51 tax abatements for property improvements. One thing’s for sure: there’s a huge property management contract out there for anyone who is looking for it. Stay tuned to Multifamily Executive Online for more coverage as the story develops.