Stung by courtroom defeats, increasing activist pressure and financial woes from a deflated real estate market, Tishman Speyer Properties (TSP) today announced that it was effectively “surrendering” Stuyvesant Town and Peter Cooper Village to its creditors.
For those who may not remember, TSP acquired the gigantic 110-building complex in 2006 for the princely sum of $5.4 billion, making it the largest real estate transaction in American history.
Stuy Town and PC Village were originally built after World War II in a clever bid to lure middle-class American GIs and their families to NYC. Today, both complexes are mini-cities of their own with multi-generational families occupying the spacious (5BRs!), rent-controlled units and owning or working in nearby businesses. TSP’s 2006 purchase was seen by critics as a blow to one of NYC’s last redoubts of solidly middle-class housing.
Tenants and affordable-housing groups immediately set to work fighting TSP’s efforts to de-regulate some of the units and ease in rent hikes. The battle culminated in an October 2009 court ruling that declared TSP “improperly began charging market rents on thousands of apartments” while collecting a reported $24 million in tax breaks for building renovation.
Things spiraled downwards from there. Improvements were made but TSP was legally unable to raise the rent on most of the apartments and had major difficulties renting newly available units. Meanwhile, the housing bubble burst and demand for real estate softened all over NYC, further eroding rental prices. Earlier this month, TSP even defaulted on $3 billion in debt and was actively pursuing debt restructuring.
What this means for the iconic complex and its tenants remains to be seen, though this certainly doesn’t come as a surprise to critics of the 2006 buyout. What do you think?
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