Stuy Town Owners Extend Period of Low Rental Rates
The current owners of Manhattan's Stuyvesant Town/Peter Cooper Village (pictured above) agreed this week to extend low rental rates to tenants after a Court of Appeals determined many tenants had been overcharged. The properties include 56 multi-story buildings spanning 80 acres and 11,227 apartments. News of an intended ownership transfer of the $1.8bn asset arrived earlier this year, just weeks after Tishman Speyer Properties and BlackRock Realty said they would miss a scheduled repayment to senior lenders on a bond used to finance debt from the joint purchase. The default of the $3bn securitized loan helped push the overall delinquency rate of commercial mortgage-backed securities (CMBS) over 8% to an historical high in April. The New York Court of Appeals ruled in a 4-to-2 opinion in October 2009 that the owners of the complex may need to refund up to $200m in rent overcharges to tenants. The ruling also limited the owners' ability to raise rates on "luxury" rent-stabilized units in the future based on market raises. The current owners of the properties agreed this week with counsel for the plaintiffs in the case -- Wolf Haldenstein Adler Freeman & Herz LLP and Bernstein Liebhard LLP -- to again extend the period of low rental rates for tenants. It marks another extension of the interim agreement reached in December 2009 to adjust rents in each apartment affected by the Court of Appeals' decision. "Under the extended agreement, affected tenants will continue to pay the lower of either their lease rent or an estimated rent-stabilized rent through the month of December 2010," according to a joint statement on Thursday. The agreement will also extend the stay of litigation between those parties through Dec. 15, 2010, although either side will have the right to terminate the stay after Sept. 15, 2010. An independent consultant, retained in March, will continue the unit-by-unit historical rent analysis over the next two to three months, and the parties expect that the matter will be resolved through good faith negotiations before the end of this year. Write to Diana Golobay.