The new owners of Stuyvesant Town and Peter Cooper Village are running out of money.
Purchased three years ago for a record $5.4 billion, the 110-building Stuy Town/Peter Cooper Village rental complex is now valued at just $2.13 billion by a credit rating agency.
The buyers -- led by real estate giant Tishman Speyer -- are running out of money and time, burning through cash reserves to try and make debt payments, the New York Times first reported.
Jerry I. and Rob Speyer and their partner, BlackRock Realty have nearly exhausted an additional $890 million set aside for apartment renovations, landscaping and interest payments. Rents are down 25 percent from their peak, officials said.
Real estate analysts have found that the Tishman's money will run out as soon as December and that the owners are at “high risk” of defaulting on $4.4 billion in loans. A spokesperson for the group did not dispute the Times report that said Tishman is likely to default on its loans and can hold out "but only until February."
On Thursday, the partnership will go before the Court of Appeals in Albany to try to overturn a lower court decision that could force them to pay hundreds of millions of dollars in rent rebates to thousands of tenants.
The decision could dramatically alter rent paid by thousands of individuals and the income of hundreds of landlords, Crains reports.
Stuy Town's woes have drawn the attention of city officials who are worried about the iconic middle-class enclave slipping into disrepair.
The officials fear that the financial problems could eventually lead to default, deferred maintenance and disinvestment at a complex that has served as an oasis of affordability in Manhattan for middle-class New Yorkers. Some 6,875 of the 11,227 apartments at the two adjoining complexes are rent regulated the Times report said.
“We are absolutely keeping an eye on it,” said Rafael E. Cestero, the city’s housing commissioner told the newspaper.
“We’re not doing this to bail out anybody who was part of the original transaction,” he added. “Those folks are going to take their lumps. We are looking at how we can ensure that the rent-stabilized units and the families that live there and families that could live there in the future could be insulated from the unwinding of this deal.”