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Walking Away from a Mortgage: Stuyvesant Town Reloaded

By corntrollio follow corntrollio   2014 May 14, 4:16am 5,524 views   4 comments   watch   nsfw   quote   share    


Now Fortress wants to buy it for $4.7B:

http://www.bloomberg.com/news/2014-05-13/fortress-said-to-be-preparing-bid-to-buy-stuyvesant-town.html

The New York-based private-equity firm is seeking financing for an offer valued at about $4.7 billion, said the person, who asked not to be identified because the discussions are private. A deal would involve bringing in equity partners to contribute cash, the person said.

Stuyvesant Town, Manhattan’s biggest rental community, is currently under the control of CWCapital Asset Management LLC, which is owned by Fortress. CWCapital is a special servicer in charge of representing bondholders after owners Tishman Speyer Properties LP and BlackRock Inc. walked away from their investment in January 2010, one of the highest-profile casualties of the property-market crash. New York apartment values have since jumped as rental demand rebounds.

I mentioned what happened when Blackrock and Tishman Speyer bought Stuy Town during the boom:

http://patrick.net/?p=1237559&c=1047837#comment-1047837

It would be a repeat of what happened during the bust. My favorite example is Stuyvesant Town in NY. Tishman Speyer and Blackrock bought it for $5.4 billion in 2006. They only put $112 million down each themselves, and the rest was raised as part of a fund, which included Calpers ($500 million), Calstrs ($100 million), the government of Singapore ($775 million in loans and equity), the Church of England, and various pension funds (a Florida one put in $250 million) as investors:

http://www.nytimes.com/2010/01/26/nyregion/26stuy.html?pagewanted=all

When the value of the property went south, Tishman and Blackrock walked away from $4.4 billion in loans. If they were individuals, we would be talking about the morality of walking away, but since it's a business, it's just a good business decision, right?

Let the popcorn consumption begin!

#housing

1   EBGuy   ignore (0)   2014 May 14, 5:07am     ↓ dislike (0)   quote   flag      

Perhaps a happy ending for those who held paper backed by the project? Barclays estimated in a May 2 report that the property could fetch $4 billion to $4.3 billion in a sale, which would result in zero losses to bondholders.
PS - the Fed has nothing to do with this...

2   MMR   ignore (0)   2014 May 14, 7:18am     ↓ dislike (0)   quote   flag      

As someone who lived there, good luck with the rent control. Most of the complex has mediocre subway access but still costs over 3000/month rent while the rent control folks were paying less than 500. That problem will not get resolved anytime soon as the rent control folks are well organized.

3   EBGuy   ignore (0)   2014 May 14, 9:07am     ↓ dislike (0)   quote   flag      

Here's another feel good, let's do it again story.
In a twist of deja vu, SunCal is back to redeveloping the Oak Knoll project in the Oakland Hills — a 167-acre, former naval hospital site with the potential for more than 900 homes.
Irvine-based SunCal has now bought the same site twice: once in 2005 for $100.5 million and again last week from the Lehman Brothers estate for an undisclosed sum.

4   Blurtman   ignore (1)   2014 May 14, 1:32pm     ↓ dislike (0)   quote   flag      

And Tishman Speyer continued to borrow money after defaulting. I guess the FICO cartel doesn't record their lousy credit history.


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