Tuesday, January 26, 2010

Peter Cooper Village Bankrupt.

By Donnie

In 2006, Tishman - Speyer (owners of Rockefeller Center) and it's partner Blackrock purchased Stuy Town at the peak of the Manhattan real estate boom. The Wall Street Journal announced what had been known in real estate circles for some time; that  the new owners defaulted on their mortgage and are turning the property over to creditors.

Legally, in sum and substance, Tishman-Blackrock thought they could boot existing rent controlled tenants and replace them with market rate tenants. The New York Court of Appeals denied the new owners' efforts to increase the rent. Sustaining a 2007 appellate court ruling, they held that owners/landlords who receive a special J-51 tax abatement forfeit the right to further remove apartments from rent regulation by luxury decontrol proceedings. As such, when the expected income from increased rent rolls vanished, their ability to pay off their financing costs and assumed mortgage debt went south. They bet wrong big time.

Peter Cooper Village is situated on lands that use to be called the Gas House District . Peter Cooper Village was and is still also home to legions of NY civil servants, Broadway actors, artists and other low and middle income New Yorkers. In order to get into Stuy Town, you were placed on a waiting list frequently for several years. It was common knowledge that if they called your name, you dropped everything and ran to sign a lease. If you didn't sign in a few hours - apartment sight unseen - you would lose your place! Met Life previously owned the rent controlled property. When real estate was peaking, they sold at the top of the market. They were led by a brilliant attorney Steven Kandarian who dumped the property largely because they predicted the past and current real estate bubble.

Politicians have not been honest with the facts of the current recession. Just last week NYU Professor Nouriel Roubini stated that China won't be able to pull the world out of the current recession. He further believes that China is fudging their economic numbers. Professor Roubini also predicted the current recession but his enemies label him "Dr. Doom".

The failure of Peter Cooper Village is an economic "fact" and reflects our present and turbulent economic and real estate troubles. Worse, The New York Times drew attention to the fact that Black Rock was selected by the Obama Administration to manage and or "rescue" the assets of Citigroup and AIG. We should all be concerned with Blackrock and it's close asociation with the government. But as Henry Adams stated "practical politics consists of ignoring facts". Ignoring troubles at Blackrock could significantly damage the nation.

(Photo Altaffer/A.P.)

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