Both Tishman Speyer Properties and BlackRock are going to miss today’s scheduled repayment to senior lenders on a bond used to finance debt from the joint purchase of Manhattan’s Stuyvesant Town and Peter Cooper Village apartments (pictured above). In the joint statement, the two companies believe today’s payment miss will not substantially effect the 20,000 to 25,000 estimated residents of Manhattan’s largest apartment block, as some reports suggest. “The joint venture has been engaged in discussions with CWCapital, the special servicer acting on behalf of the lenders, and hopes to continue good-faith negotiations toward a potential restructuring of the debt,” said the statement. “The debt for Stuyvesant and Peter Cooper Village is secured exclusively by the property and is not cross-collateralized with any others. It does not impact, nor is it impacted by, any other properties in which Tishman Speyer or BlackRock may be invested.” So as Tishman and BlackRock investors needn’t worry, neither should the residents, HousingWire sources say: “This is a rent regulation town, so you can’t evict,” said an urban researcher at New York University who asked to remain anonymous. “Even if the property is declared bankrupt, they’ll be fine.” The researcher added that the deal was “always way over-leveraged.” When Tishman and BlackRock bought the properties in 2006 for $5.4bn, it was based on a certain expectation that rent-controlled residents could be replaced. Several amenities were added to the 100 buildings, such as landscaping and workout areas, which drained on the reserve fund – a $400m interest reserve and $190m general reserve. Today’s news indicates that fund is now empty. The case, in fact, went all the way to the New York Court of Appeal in 2007, where the judge sided with tenants in Roberts vs. Tishman. The judge’s decision — on Oct. 22, 2009 — not only placed an additional short-term financial burden on the owners, but also hindered their ability to increase cash flow in the long run, according to Moody’s Investor Service research dated Dec. 3, 2009. The Citizens Housing and Planning Council (CHPC), a non-profit neighborhood and community advocacy firm which monitors large-scale housing issues in the city also believes today’s news is not likely have large repercussions. “Of all the over mortgaged properties in New York City, Stuy Town is not our greatest concern, as there is still a great deal of value in the property,” said CHPC senior fellow, Harold Shultz. “I would say former Section 8 and other subsidized developments around the Bronx and Upper Manhattan are much more risky, in terms of uncertain outcome for the tenants.” One such property, Shultz adds is the Ocelot Capital portfolio in the Bronx. In March 2007, Deutsche Bank Berkshire Mortgage (DBBM) provided a $10m Fannie Mae loan for the acquisition of three multifamily properties in New York. The financing was structured to be a 10-year fixed rate loan, with three years of interest only payments followed by a 30-year amortization schedule and was funded to 80% of value. The property is in total default, in what the CHPC calls “zombie mortgages” with little recourse left for tenants, Shultz said. The owner of Ocelot has also since vanished. The situation at Stuyvesent town is somewhat less dramatic. As HousingWire previously reported, credit-rating agency Realpoint projected the delinquency rate on the overall unpaid balance of CMBS may grow as much as 31-58% by mid-2010, factoring in the potential default of the specially-serviced $3bn Peter Cooper Village/Stuyvesant Town loan. So today’s announcement did not come unexpected. A call from Moody’s also states that the credit rating agency had taken action, either to review for downgrade or downgrade portions of the commercial mortgage-backed securities (CMBS) linked to Peter Cooper and Stuyvesant Town. Though tied up most of the day with investor calls concerning the impact of the missed payments, Adam Fox, a senior director at Fitch Ratings agreed with other sources contacted for this article: “The special servicer will continue to work with the borrower to come up with a resolution.” CMBS performance is also adversely affected by significant defaults within the hotel sector. As HousingWire previously reported, the overall delinquency rate among commercial mortgage-backed securities (CMBS) rose 85 bps to 5.65% in November, from 4.8% a month earlier, according to a monthly report by CMBS and commercial mortgage information provider Trepp. Hotel delinquencies spearheaded the increase, jumping to 14.09% in November from 8.67% in October, led by the Extended Stay Hotel default. The trend in rising delinquency in CMBS looks to continue well into 2010, according to Realpoint. “Overall, following the delinquency reporting of the $4.1bn Extended Stay Hotel loan and the experienced average growth month-over-month, we now project the delinquent unpaid CMBS balance to continue along its current trend and grow to between $50bn and $60bn by mid 2010,” Realpoint researchers wrote in the December 2009 report. Write to Jacob Gaffney. — additional reporting by Diana Golobay Disclosure: The authors hold no relevant investments