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Stuy-Town Eyes Special Servicer

NEW YORK CITY-The troubled, sprawling apartment complex, according to the Wall Street Journal may be turned over to a special servicer as it nears default.

By Ryan Clark and Cody Lyon | Updated on October 14, 2009

NEW YORK CITY-As GlobeSt.com reported in August, the beleaguered Peter Cooper Village and Stuyvesant Town, owned by a venture of Tishman Speyer, is nearing default, as early as January, but according to the Wall Street Journal it may already have a special servicer lined up to take over its CMBS debt. The 80-acre, 56-building apartment complex in the lower east side of Manhattan was purchased from Metlife in 2006 for $5.6 billion and is now estimated to be worth less than half that.

Along with that come legal troubles, as well. An appeals court ruled that Stuy-Town and Peter Cooper’s landlord raised rents and deregulated apartments after getting special tax breaks. News reports speculated that a decision against them could cost landlord Tishman Speyer as well as former landlord Metropolitan Life more than $200 million in restitution.

The court had also imposed a “moratorium on conversion” which has reduced capital expenditures. However, the use of debt service reserves has increased because the court also requires the borrower to seperately escrow the difference between stabilized and market rents on former stabilized units. The State Supreme Court will hear an appeal on the case this month.

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