Tishman, BlackRock to miss Stuyvesant town payment

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Sunday, 10 January 2010

Oshrat Carmiel
BloombergTishman

Speyer Properties LP and BlackRock Inc. will miss a bond payment today on debt from their $5.4 billion purchase of Manhattan’s Stuyvesant Town and Peter Cooper Village apartments, the companies said in a statement.

“Today’s announcement has no immediate impact on tenant services or the day-to-day operations of the community,” Tishman and BlackRock said in a joint statement.

Missing the payment puts the 80-acre property, Manhattan’s largest residential enclave, on course to become the second- largest default in a commercial mortgage-backed security, after the $4.1 billion default of loans backing Extended Stay America Inc. hotels last year, according to Fitch Ratings. Tishman and BlackRock’s monthly debt payments are $16.1 million, according to Adam Fox, senior director at Fitch.

Rob Speyer, Tishman Speyer’s co-chief executive officer, called New York City Councilman Daniel Garodnick yesterday to tell him of the company’s plans.

“He said that they were going to miss a payment and that would begin the process of a default,” said Garodnick, a resident of Peter Cooper Village as well as its city council representative.

Tishman Speyer and BlackRock bought the 11,200-unit property -- Manhattan’s biggest apartment complex -- in 2006 with plans to raise rents, evict illegal occupants and upgrade with amenities including a gym, concierge service and new gardens.

Those plans were challenged by a recession, slackening demand for rentals and a legal victory for tenants who claimed some rent increases were illegal. The World War II-era development houses about 25,000 people.

‘Close watch’

The New York City Department of Housing Preservation and Development said in a statement today that it has been keeping a “close watch” on the financial situation.

“Since the 1940s, Stuyvesant Town and Peter Cooper Village have served the housing needs of the hardworking middle-class families of New York, and it is our overriding concern that they remain a key component of the city’s affordable housing stock,” Commissioner Rafael Cestero said in the statement.

The $3 billion in debt used to buy the property was bundled with other commercial mortgages and sold as bonds. Fitch estimates the property’s value to be $1.8 billion today, making it worth less than the senior debt.

Bondholder losses

“Bondholders are looking at anywhere between $1 billion and $1.5 billion in losses,” said Steve Kuritz, senior vice president at credit rating company Realpoint LLC.

General reserves of $190 million that were set aside at the purchase of the property are depleted. A debt service reserve of $400 million, which Tishman had used for payments, dwindled to $5.64 million as of December, according to Realpoint.

“The debt for Stuyvesant and Peter Cooper Village is secured exclusively by the property and is not cross- collateralized with any others,” Tishman and BlackRock said in today’s statement.

“It does not impact, nor is it impacted by, any other properties in which Tishman Speyer or BlackRock may be invested.”

The companies turned the loan over to mortgage servicer CW Capital in November.

“The joint venture has been engaged in discussions with CWCapital, the special servicer acting on behalf of the lenders, and hopes to continue good-faith negotiations toward a potential restructuring of the debt,” Tishman and BlackRock said.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aDazwm4SF52Y&pos=6

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Comments (1)

Sun 10 Jan 2010 5:31 PM | quantum

GIC faces potential losses of more than SGD$1 billion dollars as Tishman, BlackRock Default on Stuyvesant Town

http://www.temasekreview.com/2010/01/10/gic-faces-potential-losses-of-more-than-sgd1-billion-dollars-as-tishman-blackrock-default-on-stuyvesant-town/