Stuy Town tenants move to buy back bankrupt apartments
Renters at the Stuyvesant Town-Peter Cooper Village, the sprawling apartment development in Manhattan currently in default, say they hold the solution to getting the property back in the black.
According to the tenants association, inhabitants of the rent-controlled apartments say they want to buy the troubled apartments.
In 2006, MetLife sold Stuy Town to Tishman Speyer Properties and BlackRock Realty for $5.4 billion. The two firms hoped to update the facilities and move in a higher-end tenant base by charging more for rent.
MetLife originally built the 11,232-apartment complex to house World War II veterans and received a 25-year tax abatement to do so. When New York state courts ruled that the tax abatement disqualified Tishman from raising rents, the property defaulted on its loans.
CW Capital is currently the special servicer representing the interests of senior commercial mortgage-backed securities bondholders, among others. Recently, analysts warned Stuy Town tenants could receive damages at the expense of senior bondholders.
Stuy Town and Brookfield Asset Management are said to be in agreement with the latest plan and lobbying CW Capital to be open to the deal. Brookfield is interested in providing the necessary capital to finance the acquisition and conversion of the living quarters.
"In the coming months, we will work with the tenants association on a proposal that will provide real value for Stuyvesant Town-Peter Cooper Village creditors, while giving tenants the stability and affordability they deserve," said Brookfield Managing Partner Barry Blattman.
CW Capital is not immediately available for comment. In order for the plan to work, a large number of tenants would need to agree to sell. They would also need protection against fellow, irate tenants who wish to stay. It remains unclear if the potential purchasers of the apartments can themselves landlord the properties under the market-rate rents Tishman could not achieve.
"This bid is about taking control of our own future, protecting current residents and ensuring that Stuyvesant Town and Peter Cooper Village remain affordable to middle-class families for the long haul,” said Alvin Doyle, President of the Stuyvesant Town-Peter Cooper Village Tenants Association.
Civil servants and local politicians are largely supportive of the initiative, with several providing statements of support.
Manhattan Borough President Scott Stringer, in particular, finds the solution extremely promising. "Preserving affordable housing in New York City must be one of our highest priorities, and this is exactly the kind of creative, tenant-driven approach that we should be looking to export to the 2,100-plus multi-family developments in New York City that have experienced similar distress," he said.
Write to Jacob Gaffney.
Follow him on Twitter @jacobgaffney.
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