NEW YORK CITY-Even before they purchase the property, the many interested prospective buyers circling Peter Cooper Village/Stuyvesant Town received a belated Christmas gift Thursday. That's when the NY Post reported that a recent appraisal valued the complex at $3.2 billion.
That's a $400-million spike from 2010, when a partnership led by developer Tishman Speyer Properties—the owner at that time—lost the 11,229-unit sprawl of rental apartments by defaulting on a $3-billion senior loan. Back then, the appraiser declared the property to be worth $2.8 billion; making the complex a loss for Tishman and partners, who bought at $5.4 billion. Adding insult to injury, Fitch Ratings deemed Stuy-Town's value as $1.8 billion.
An analyst tells the Post that the uptick in value can be attributed to an increase in the monies collected from the residents. Steve Kuritz, SVP at Morningstar Credit Ratings, estimates that rental income has risen to $167 million this year from $129 million in 2009.
No matter the cause, the turn around in the town-within-a-town's value is likely to heat up the battle for ownership, a fight which already has many contenders.
William Ackman, founder and CEO of hedge fund Pershing Square Capital Management LP, is in one corner while another has billionaire Wilbur Ross, CEO and chairman of WL Ross & Co., in waiting and real-estate developer Gerald Guterman, founder of Guterman Partners, is another player, according to the Post.
Also in the ring are the tenants, who have been approached about turning their units into condominiums. Some have expressed reluctance about such a conversion, particularly in the wake of Hurricane Sandy, which struck Stuy-Town's buildings with considerable damage, notes the Post. But the complex's $250-million flood insurance policy should cover the costs of repairs, Kuritz tells the paper.
The tenants' uncertainty is giving at least one buyer pause.
“I would have no interest in it if it is simply an expensive ticket to internecine warfare among the tenants,” Ross says to the Post.
Also possibly at issue is the complex's recent history of legal battles between the ownership and tenants.
In 2007, a class action lawsuit was brought by tenants against two trusts that held a $3-billion senior loan on the village along with former owner MetLife over rent overcharge claims, according to a previous GlobeSt.com article. An October 2009 ruling by the New York State Court of Appeals found that the Tishman partnership unlawfully deregulated apartments at the complex while continuing to receive J-51 tax abatements. The partnership defaulted on the senior loan in 2010, and operations of the complex were later turned over to special servicer CW Financial Services on behalf of the trusts, the GlobeSt.com story states.
The matter was settled earlier this year, to the tune of $68.75 million. The agreement called for the two trusts, PCV ST Owner LP and ST Owner LP, to contribute $58.25 million toward the settlement, while former owner MetLife Insurance Co. agreed to put in $10.5 million. MetLife developed the complex in the late 1940s.
It was unclear at press time if the rent overcharge concerns were completely resolved or whether the former owners have plans to appeal the decision.
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
