Via New York Post

The Tenants Association at beleaguered Stuyvesant Town-Peter Cooper Village is is handing out documents asking residents to pledge their support to whatever action to association takes to gain control of the 80-acre property.

The agreement asks the complex's 25,000 or so residents to agree to two things. First, that they "designate" the board of the StuyTown tenants association to "make efforts to negotiate on behalf of the tenants and to protect (their) interests." Secondly, that tenants give the association "the opportunity to present me with a plan for my consideration" prior to the tenant making any moves to buy their apartments.

The agreement is creating a lot of hubbub in the halls of the historic apartment complex, with neighbors asking each other what to do, sources say. Some tenants are refusing to sign until they hear the TA's plan of action, which should be revealed this Saturday during a meeting at Baruch College.

"They want us to follow their lead, but I don't know what their lead is," said Jonathan Turkel, a long time resident. "I could be following them off a cliff for all I know."

Other tenants say they don't want to sign anything that might bar them from going forward with plans to buy their own apartments, and are seeking more information about this point before putting ink to paper. Even though the documents specify that it's not legally binding, the language alone is making people nervous, sources say.

Stuy Town Tenant Leaders to Residents: Sign Here [NY Post]

Via Fortune

Whether it's steel, textiles, or auto manufacturing, Wilbur Ross has built a lucrative career finding gold in industries left for dead.

He did it first at Rothschild, and since 2000 at his own investment fund, WL Ross & Co. To cite just one example, Ross bought bankrupt steelmaker LTV for $325 million in 2002, and sold it for $4.5 billion two years later.

As the economy continues to struggle, Fortune's Katie Benner sat down with the master of distressed investing to hear where prospects can be found in this turbulent time.

Where do you think the biggest opportunities are now?

There are deep value opportunities in insurance stocks, which were beaten down because of their exposure to the subprime crisis, annuities, and commercial real estate. I won't name names, but some well-managed life insurance and fire and casualty companies will come through this stronger. They used to trade at one or two times book value but now trade at three-quarters book.

Regional and subregional banks still have a lot of issues to resolve, and they have enough commercial real estate assets on their books to make most of them insolvent on a mark-to-market basis. Of course, they won't all mark their assets to market and their loans won't all go bad. But another several hundred banks will fail before we get through this cycle. We just bought Bank United in Florida for $925 million, and the FDIC is providing about $4.9 billion in assistance.

I still like TIPS (Treasury inflation-protected securities), and I think a big opportunity is coming in the municipal bond market. Even if it doesn't default, some state or local government will come close enough to scare everyone to death. That will be a wonderful buying opportunity.

And as one of the public-private investment managers for the Treasury, we have been buying lots of residential mortgage-backed securities. The price often more than discounts the problems that are ahead. After another year or so of property value declines I think that market will stabilize along with the securitization market. Securitization is a fundamentally sound idea, even if it was poorly executed.

How can we fix the securitization market?

No one had skin in the game. That's where things went wrong. My proposal then is that everyone has skin in the game. Ratings agencies' fees and compensation should be paid over time and depend on the enduring quality of the rating. Employees at banks and brokerages should have their compensation tied to the long-term success of their products. If a trader is paid a big bonus for a portfolio that turns out to be a disaster a year later, did he really earn the money he was paid?

What about commercial real estate? There are reports that you want to buy the near-bankrupt apartment complex Peter Cooper Village/Stuyvesant Town in New York City.

At some point commercial real estate will become very interesting, but not yet. The declines in value are not over. Stuyvesant Town is an early indicator of what's to come -- it's a poster child for the mistakes made during the boom -- and we are interested in it.

In the original deal for the complex, the financing was predicated on the idea that the apartments would no longer fall under rent control and that they would start generating a lot more cash. That never happened. There were also 11 tiers of mezzanine debt on the complex, which probably have no value. The debt was distributed into six or so commercial mortgage-backed securities that were sliced up and sold to investors.

So there's a huge pile of paper out there that is very affected by this deal. At some point these securities will fall in value enough to be attractive. But at the moment the prices don't reflect the problem environment that we see.

Continue reading "Mr. Distress is Ready to Buy" @ Fortune

While perusing Crain's today, a Stuy-Spy noticed an "NYC Job-Loss Meter" which credits Tishman Speyer's red brick albatross for 115 newly unemployed people. No word if a severance package was offered before the cloven hooves kicked them to the curb in a cloud of sulfuric smoke.

Via CNBC.com

Via US REO Properties

Stuyvesant Town and Peter Cooper village complexes are in trouble.

One hedge fund entity has taken over a major share of their debts and is now trying to take over control. This step will create snarls in an already complex financial and political set up involving the biggest apartment units in Manhattan. 25,000 tenants are apprehensive about their fate in the future.
Tishman Speyer Properties and BlackRock Realty purchased the two - Stuyvesant Town and Peter Cooper Village for a hefty sum of $5.4 billion. But when the owners started to lag behind on their mortgage payments they decided to hand over the estates to the lenders.

A hedge fund of New Jersey, Appaloosa Management is headed by David Tepper. Papers have been filed last Tuesday (23rd February) by it in the USA District Court throwing a challenge to the firm that oversees the two spacious complexes overlooking East River. The suit was filed representing the lenders. It was stated that the firm had "irrationally and imprudently" been following a path that would cause hundreds of millions of loss for the debt holders.

Appaloosa intervened objecting to a decision taken by the firm - CW Capital Management to foreclose on the owners of the two estates. The argument was that a foreclosure would involve a cost of nearly $200 million for transferring of taxes. Appaloosa said that if CW Capital had pushed the borrowers into bankruptcy the need for paying those taxes would not have arisen.

Appaloosa has wanted the permission of the court to intervene in this issue. It has also stated that CW Capital being both the servicer of the mortgage and a major debt holder has "irreconcilable conflicts of interest."

Continue reading "Stuyvesant Town and Peter Cooper Village Complexes are in Foreclosure Trouble" at USREOPoperties.com

Via GlobeSt.com

By now the tale of the failed Stuyvesant Town/Peter Cooper Village deal is well known. Bought for a record $5.4 billion in 2006 by a JV of Tishman Speyer and BlackRock Realty, the 110-building, 11,200-plus-unit residential property is one of Manhattan's premier residential complexes.

Yet the economy and legal challenges threw a kink into the buyers' plan to bring the complex's units from stabilized to market rates. As a result, the property's cash flow remained too low to cover debt-service obligations. By year-end 2009, the Tishman-BlackRock JV had not only gone through its $400-million debt-service reserve but also a nearly $200-million general reserve.

What was to be the final blow came when the New York State appeals court ruled that the JV and its predecessors had improperly deregulated and raised rents on thousands of units at the complex. Not only was the further conversion of more units halted, but the court also found that the tenants were due some $215 million in rent rebates.

Now valued at some $1.8 billion--a 67% decline from its price at the peak of the market--the property was severely underwater on its mortgage. In January, the Tishman-BlackRock JV said it would be handing the keys to the complex back to the lenders after being unable to negotiate a restructuring of its debt that would maintain its ownership. The ownership stake was also why Tishman bowed out of managing the property; special servicer CWCapital has since hired local firm Rose Associates.

Calls made to CWCapital were not returned. BlackRock deferred comments to Tishman, which would not comment beyond its Jan. 25 joint statement announcing its intention to transfer control of the complex to its creditors.

Continue reading "The First of the Worst" @ GlobeSt.com

Via CityHallNews.com

Members of the Assembly are moving quickly to kill a proposal by State Sen. Pedro Espada that would freeze rents in New York City for as many as 750,000 tenants.

According to tenant activists, the Espada bill would amount to a get-out-ofjail-free card for landlords.

The bill would allow landlords who illegally deregulated thousands of apartments while receiving special tax breaks to keep those units at market rate by simply paying back the benefits. A landmark court ruling last year found that the owners of Stuyvesant Town and Peter Cooper Village had improperly collected what are known as J-51 tax breaks while converting thousands of apartments to market rate. In the months since the ruling, tenants at buildings from Harlem to TriBeCa have filed suits to claw back millions in rent increases.

Espada's bill would nullify those suits, saving landlords millions.

Continue reading "Landlords Look To Build Support For 'Rent Freeze' Bill In Wake Of Stuy-Town Ruling" @ CityHallNews.com

Just wait until our friends at NY Mag's Daily Intel catch wind of this. 33 year old Zachari Gaston was caught on a Stuy Town roof twice last week, the first time taking a dump, and the second time going back to retrieve his 27 bags of pot he left behind. So yes, people do defecate in the stairwells, and on the roofs, and...sigh...we promise we'll lighten up on the feces-related posts next week. 

The weather is slightly warmer. Perfect day for a walk. Not in Stuyvesant Town! As the snow melts in Stuyvesant Town it's revealing the remnants of irresponsible dog owners in the form of poodle bombs throughout the complex. An angry tenant just wrote us:

"I counted no less than 4 piles of dog shit on the Ave A loop between 14th an 3 Oval around noon today. I guess people feel the snow washes it away and nobody will notice. This place did nothing but make me angry for 3 years, now it's making me nauseous."



And if the mini-loafs aren't bad enough, residents are having to deal with unleashed dogs attacking their pets. A Stuy Spy snapped a photo today of this flier outside of Associated Market which reads in part:

"There is a brown and white bulldog short & very heavy that attacked my small dog. This dog was loose with it's irresponsible owners when I came outside 655 E14th Stuy Town at Playground 5. The dog chased my dog back up the stairs and grabbed it by the back, had my dog dangling in mid air screaming with pain and wouldn't release my dog. These people are completely irrisponsible."

The writer goes on to say the dog owners had to pry the dog out of their dog's mouth and left without saying anything nor offering an appology.

Non-residents are not allowed to walk their dogs in Stuyvesant Town and Stuy Town dog owners are suppossed to keep their dogs leashed at all times. Perhaps it's time security starts enforcing the dog rules around Stuyvesant Town before another dog is attacked, or worse, a small child.

When Stuyvesant Town residents aren't slipping on icy walkways, they are slipping on large piles of brown left behind by inconsiderate dog owners. A Stuy Spy took this photo today of a garbage can surrounded by dog feces.

When the Tishman Speyer regime took over the property, they did away with the "no dogs" policy that had been in effect since the '40s. Unfortunately they did little to nothing to prevent the place from drowning in dog urine and mini-loafs ala Gramercy Park. This means anyone with a dog, both residents and non-residents, can use the property as a pooch potty.

While some dog owners are responsible and pick up after their dogs, there are plenty of others who let their dogs yo-yo into what's left of the landscaping - on their illegal retractable leashes - to drop a bomb. Hopefully the new management will do something about this mess.