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The judgment could set back the cash-strapped Tishman and BlackRock even deeper in a financial hole. With a reserve reportedly only enough to service its debt between the end of the year and February 2010, Tishman and BlackRock might have to pony up millions of dollars in rent rebates to thousands of tenants. It's uncertain how much MetLife would be responsible for, but the ruling covers a span of 15 years. Before the ruling, experts pointed out that foreclosure was a likely scenario, but now that might not be the case. According to a Bloomberg report that quotes the tenants' lawyer Alexander Schmidt, "If they (Tishman and BlackRock) end up transferring ownership to the lenders, under New York law, the lenders are responsible for the overcharges." And if that's the case, the lenders may be more amenable to work out a debt restructuring, which may be a more cost-effective remedy than owning a property with a hefty bill to its tenants. - Gerald Magpily
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From: Reality Check,
I agree with Ollie. All rent stabilized properties in New York are now toxic. It was bad enough dealing with rent stabilized tenants who believe that it is their god-given "right" to a publicly subsidized apartment in New York City, but raising real estate values made such properties attractive to "misinformed" investors. This decision will soon be seen as the ruling that sunk NYC real estate and property values for future generations. The amount of future litigation is going to be breathtaking. Tishman should declare bankruptcy and walk away from their investment.
Posted on:
October 23, 2009 1:49 PM
From: AC,
Tishman and BlackRock should have known better. The StuyTown deal is a simple case of gravity - what goes up must come down. In this case, a sinking economy producing fewer people who cyan afford to pay for Tishman's exhorbitant rent and a government who is protenant means red ink for the owners. Tishman should just file bankruptcy now and stick with what they know office properties and luxury housing ...
Posted on:
October 23, 2009 7:22 PM
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Are Tishman Speyer Properties LP and BlackRock Realty -- a unit of BlackRock Inc. (NYSE: BLK) -- feeling buyer's remorse over their record $5.4 billion purchase of Stuyvesant Town Peter Cooper Village in 2006? It's likely, especially since a New York state court judgment on Thursday ruled that the present owners along with previous owner MetLife Inc. (NYSE: MET) raised rents illegally on rent-stabilized tenants while the owners received tax subsidies. 
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Nothing like catching a falling knife and then plunging it into your eye. You have got to kidding yourself if you think that there are investors willing to step in a by this place now that the possibility of raising rents to market is off the table. the 2 Billion value was prior to this decision and was based on a 6% cap rate. Do you really thik that equity will tollerate a negative leverage purchase? Oh and guess what New York. You just blew up the Dam on tax revenue from property tax reciepts. Good luck plugging that gap! This property's fate is now sealed as a future slum. Congratulations. Best intensions almost always have unintended results.