Yet More Aspersions Cast on Tishman-Speyer's Stuy Town Deal

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By Dana Rubinstein

October 2, 2008 | 1:01 p.m

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dan de luca via flickr.

Here's the latest article to question the wisdom of Tishman Speyer forking over a record-setting $5.4 billion for Stuyvesant Town and Peter Cooper Village in 2006. And this article features something more than mere speculation -- actual numbers!

According to Bloomberg, when Standard & Poor's "downgraded ratings on 22 classes of commercial mortgage-backed securities related to the properties," the ratings agency explained that, "Stuyvesant Town is now worth 10 percent less than what Tishman and BlackRock paid two years ago."

S&P downgraded the securities because Tishman Speyer hasn't been able to deregulate as many of the complex's 11,200 units as quickly as originally predicted:

When MetLife sold the property in 2006, it estimated residents of 1,600 apartments would move out, die or have their rents reach the $2,000 deregulation threshold by the close of 2008, letting the landlord raise rents by any amount the market would bear. So far, Tishman has only deregulated about 1,000 apartments, according to S&P, 38 percent fewer than MetLife estimated was possible....

Tishman is confident of the long-term prospects for the properties, spokesman Robert Lawson said in a statement. The complex has an overall vacancy rate of just 2 percent and rents were increased 10 percent over the summer, he said. Tishman and its partners will raise more money for the development as needed, he said.

This is just the latest report to emerge that questions the soundness of the Tishman Speyer deal. In early September, Barron's called the deal "the most prominent trouble spot" in the Manhattan market.