For some, Tishman Speyer Properties' $5.4 billion purchase in 2006 of Manhattan residential complex Peter Cooper Village and Stuyvesant Town symbolized the peak of the real estate boom. Now, the bubble has burst, and the New York-based real estate company is starting to feel some pain as several bonds tied to the 80-acre middle-income development were downgraded by Moody's Investors Service last week following a Standard & Poor's downgrade just a few weeks earlier.
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The rating agency said it was concerned Tishman Speyer is having difficulty converting the largely rent-stabilized
complex into market-rate dwellings. Meanwhile, the New York Post reports that Moody's analyst Mike Gerdes said "operating costs are higher than expected." Media reports have also reported that Tishman Speyer has already spent $450 million of its $650 million in
cash reserves, which it set aside two years ago to pay for renovations and a $3 billion mortgage loan.
Meanwhile, the value of the property reportedly has dropped 10% since the purchase, meaning if Tishman Speyer were forced to sell, then it likely would get bids less than it had paid. - Gerald Magpily
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