Based on the current amount of money coming in, Realpoint puts the value of the complex at $2.13 billion, a number that could go even lower should rents fall or the court decision go in favor of the tenants, according to the author of the report, Steve Kuritz, a senior vice president at Realpoint.
“Worst-case, their projected income could go down below what we’re seeing now, and in that case, the value could go down,” said Mr. Kuritz.
Had the tenants indeed won, the situation would not have been so dire, in part due to the model the group was proposing. Backed by labor-pension-fund money and other investors, in a model put together by Troutman Sanders attorney Leonard Grunstein, the tenants’ bid would have seen a substantial portion of the apartments being sold as co-ops, bringing a large infusion of money early in the process and spreading any losses out among the new co-op owners.
“We would have not had the same pressure to move tenants out of rent-stabilized apartments to the market rate,” said Councilman Dan Garodnick, a Peter Cooper Village resident, who led the organization of the tenant bid. “Short-term market fluctuations would have been less significant for us,” he added, rejecting the notion that the tenants’ loss in 2006 was a hidden blessing. “The tenants would be much better off if we had won.”
IN A NEW twist, it’s now at least conceivable that the tenants—along with other former bidders—might just have another crack at Stuy Town, this time at presumably a much less inflated price. Tishman Speyer is on pace, before the end of the year, to exhaust the reserve fund that has been helping it to make debt payments, as Realpoint reported the fund had just $33 million left as of September, down from $400 million in 2007. Since June, the report said that between $7 million and $19 million has been taken out of the reserve fund each month.
In terms of the existing investors, things aren’t looking great. A Florida state pension fund recently wrote off its entire $250 million equity investment in Stuyvesant Town, presumably assuming it would never see any money back, given the many debt investors who are ahead in the queue. The first loan in line for repayment is a $3 billion mortgage now held by various bondholders, but there isn’t even enough money coming in yearly to support that, let alone pay back the rest of the $6.2 billion that was cobbled together to buy the property.
Just what shape a financial reshuffling takes—be it a sale, new investors, default, etc.—will have to wait, it seems, until after the deregulation court case is decided, interested observers say. That decision is likely coming in the next few weeks.
Rob Speyer, co-CEO of Tishman Speyer, has expressed confidence his firm will prevail in court, and has also said it intends to restructure the deal, though what role it eventually takes is unclear.
Would the tenants want another shot, opening the door for more press conferences and rallies, bullhorns and all? “If you talk to anybody, I think, at Stuyvesant Town,” said Mr. Doyle, of the tenants association, “they would be interested in pursuing that.”
ebrown@observer.com
