Lower- to middle-income apartment buildings in New York City were once in high demand by public equity firms and real estate investment trusts just two years ago. Now, with the economy faltering and financing hard to come by, these 2007 vintage deals for Stuyvesant Town/Peter Cooper Village and the Riverton Houses in Manhattan are turning out to be a bust, so it's no wonder that owners of Starrett City in Brooklyn have taken the complex with 5,881 apartments in 46 towers off the auction block.
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Owners of the complex, a group of investors led by Disque Dean, put the complex that spans 146 acres up for sale two years ago in the waning days of the height of the residential real estate frenzy. At the time, the group looked to garner at least $1.2 billion -- a sum that seems laughable now but attainable two years ago when Stuyvesant Town/Peter Cooper Village was sold for a record $5.4 billion to Tishman Speyer Properties and the real estate arm of BlackRock Inc. in October 2006.
By being the last out the door, the pending sale of Starrett City
met major opposition from the start as residents and politicians
rallied to save the development from going to owners that intended to
push rents up dramatically. One such bidder, David Bistricer who
offered $1.3 billion for Starrett, was blocked in 2007.
Meanwhile, the Stuyvesant Town deal in the short-term has turned out to be a disappointment as Tishman Speyer has not been able to expel the amount of rent-stabilized tenants they had intended and spent millions more in improvements such as expensive landscaping, which hasn't improved the value of the property in this falling market. Tishman's failed plan caused Moody's Investors Service to downgrade the bonds, whose proceeds were used to purchase and make improvements on the property.
Now it seems the owners of Starrett say they're committed to holding on to the property but are exploring their options. The New York Times suggests the owners could do perhaps a $500 million refinancing, enabling them to pay off
an existing $234.4 million and parcel hundreds of millions of dollars to
investors without having to pay taxes on capital gains. - Gerald Magpily
See New York Times article
See Dealscape: Tishman Speyer gets Moody over Stuyvesant Town bond downgrade
See Dealwatch: Stuyvesant Town, Peter Cooper Village
