The Upper East Side girls’ prep school that has graduated the likes of Caroline Kennedy and Kyra Sedgwick won’t follow through with its expansion into the nearby apartment building it has been eyeing for the past four years, according to the Post. The Brearley School, at 610 East 83rd Street, had been angling to buy half the building at 85 East End Avenue, which is owned by BlackRock Realty, for use as additional teaching space. The plan would have evicted elderly, rent-regulated residents from the building, but sources said the school’s contract has fallen through. Brearley would not say why, but said it is still seeking to expand. BlackRock declined to comment. [Post]

Investment banking group Moelis & Company is set to become a financial advisor to the Stuyvesant Town and Peter Cooper Village Tenants Association, according to Crain’s, throughout the complex’s coming restructuring plan. The move is being made in an effort to ensure than the tenants’ needs are being weighed with the same consideration as creditors’ and potential investors’, according to Al Doyle, president of the association. Doyle said he’s “confident that Moelis & Company can help protect tenants’ interests,” so they will “come out on top of this complex restructuring.”
[more]

The California Public Employees’ Retirement System, otherwise known as Calpers, is raising eyebrows for its investment in real estate developments across the country making the transition from rent-stabilization to market-rate, according to the Wall Street Journal. While Calpers took a major hit on its investment with the Stuyvesant Town and Peter Cooper Village apartment complex, experts say the organization, which handles approximately $200 billion in California state retiree funds, has profited off of numerous similar developments, like the Riverton Houses. Calpers, for its part, says it’s taking a critical eye to its investment trend. “These historical investments were made under previous investment leaders,” Brad Pacheco, a Calpers spokesperson, said. “Nevertheless, our current investment staff has the issue under study.”

From the February issue: It’s been a sort of parlor game in New York’s real estate community for
some time: speculating on whether peak-market buyers will hold on to
their highly leveraged properties.
Then, in a move that shook the industry last month, Tishman Speyer
Properties and BlackRock Realty decided to turn over the keys to the
$5.4 billion Stuyvesant Town and Peter Cooper Village.
But not everyone has gone this route. Other overextended borrowers
have kept control of their properties following a debt restructuring,
including developers Lev Leviev and Joseph Moinian.
As part of a workout — the complex process that’s often decided by
the leverage each party has in the development — the bank or private
equity firm must weigh its options.  [more]

Richard Lefrak’s organization is a possible contender for Stuy Town

Tishman Speyer Properties and BlackRock Realty were pilloried for aggressively pushing out tenants and running afoul of the city’s J-51 tax abatement rules. But some of the firms that are being mentioned as possible replacements as owners or managers at Stuyvesant Town and Peter Cooper Village — such as developers LeFrak Organization and Rose Associates, and real estate firm Stonehenge Partners — come with their own skeletons in the closet. The New York City real estate world is bracing for a struggle among titans for management or ownership of the 11,200-unit housing complex on Manhattan’s East Side following the announcement  last month that the owners would cede control. Potential parties must negotiate with special servicer CWCapital Asset Management, the majority of which is owned by Canadian institutional fund Caisse de dépôt et placement du Québec. The special servicer represents the interests of the bondholders of the securitized loans on Stuyvesant Town. Other firms being bandied about as possible investors or investors are WL Ross & Co., Centerbridge Partners, Related Companies, WinnCompanies and Prudential Douglas Elliman, according to media reports. The thorny city tax abatement program known as J-51 that contributed to the forfeiture of Stuy Town and Peter Cooper Village has dogged one of the leading contenders for the site, LeFrak. [more]

Tishman Speyer Realty and BlackRock Realty agreed with tenants to permit the Stuyvesant Town and Peter Cooper Village lawsuit to proceed as a class action case, and also extended an interim agreement to lower rents until June, according to a joint statement from lawyers and the landlord. Under the agreement, tenants will continue to pay, until the end of June, the lower of either their existing rent or estimated rent-stabilized rents. Tenants will also be granted certain rights that exist under the city’s rent stabilization law, including rights to renew leases and family succession. After missing a $16.1 million interest payment, Tishman Speyer and BlackRock last month agreed to turn the 110-building complex over to creditors in a deed-in-lieu of foreclosure. The companies bought the complex in 2006 for $5.4 billion. Tenants won a landmark lawsuit alleging the landlord illegally deregulated apartments at the complex, which received J-51 tax benefits from the city. [more]

CWCaptial, the financial group that took over the senior mortgage at Stuyvesant Town and Peter Cooper Village early this week, broke its silence in a letter to City Council member and Stuy Town rent stabilization advocate Dan Garodnick, according to the New York Observer. Despite the special servicer’s reluctance to publicly comment on the ongoing Stuyvesant Town mortgage melee, the letter, written by Charles Spetka, president of CWCaptial, heaps praise on the council member, referring to Garodnick as “an outstanding community leader,” and promises that CWCapital will “make every effort to work cooperatively with [Garodnick] and the [Stuyvesant Town and Peter Cooper Village] residents.” Although Spetka noted that his company’s first priority is to secure the $3 billion owed to mortgage lenders, he said that CWCapital “believe[s] strongly that the underlying value of these properties is directly linked to maintaining the [positive] attributes of Peter Cooper Village and Stuyvesant Town.”

Tishman Speyer and BlackRock Realty, the owners of Stuyvesant Town and Peter Cooper Village, are turning the 110-building complex over to creditors in a deed-in-lieu of foreclosure, the companies announced this morning. The partners went into default on the property after missing a $16.1 million debt payment earlier this month. The complex was purchased for $5.4 billion in 2006 in the most expensive single residential sale ever in the country and it has $4.4 billion in debt. The property is now worth an estimated $1.8 billion. Creditors had been threatening to move forward with foreclosure proceedings in recent weeks and to remove Tishman Speyer as property manager. “We make this decision as we feel a battle over the property or a contested bankruptcy proceeding is not in the long-term interest of the property, its residents, our partnership or the city,” Tishman and BlackRock said in a joint statement to the media. “Tishman Speyer would not consider a long-term management contract to
continue operating the property that does not involve ownership. Without a restructuring that would keep our ownership group as part of the equity, we felt it best that the new owners install a new management team.” Tishman Speyer itself invested only $112 million in the property; damage to the company’s reputation is likely to be more palpable in the aftermath of the soured deal. [WSJ]

The owners of Stuyvesant Town and Peter Cooper Village reached an
interim agreement today on rents with plaintiffs who won a New York
State Court of Appeals ruling in October over illegal rent increases in
apartment buildings with J-51 tax abatements. The agreement, in the form of an order issued by State Supreme Court Justice Richard Lowe (click here for the document), was approved this morning, a spokesperson for the Stuy Town owners said in an e-mail. It would also convert the lawsuit filed by a limited number
of parties to a class action lawsuit, broadly covering Stuy Town. The East Side complex’s owners, Tishman Speyer Properties and BlackRock
Realty, negotiated an adjustment to rents in each apartment in the
lawsuit to a rent-stabilized level, a statement said. The
residents would also be covered by certain rights under rent
stabilization laws, including succession and renewal rights. “In addition, Tishman Speyer and BlackRock have reached agreement with
counsel for the plaintiffs on a more inclusive, six-month agreement
covering a wider range of unresolved issues beyond those addressed in
the interim agreement. The six-month agreement, which is intended to
achieve an expedited resolution of the plaintiffs’ case, is contingent upon
consent by CW Capital, the special servicer acting on behalf of the
property’s senior lenders,” a statement by Tishman Speyer and attorneys
for the residents said. TRD [more]

The recent ruling in favor of tenants at Stuyvesant Town and Peter Cooper Village initially put the city’s landlords on the defensive, but now property owners are asking if the city might owe them money because of the decision. Frank Ricci, director of governmental affairs at the landlord trade group Rent Stabilization Association, said he has fielded calls from “dozens” of landlords asking if the city might owe them for overpayment in taxes. And in recent weeks the law firm Belkin Burden Wenig & Goldman raised more questions in a bulletin, including whether the city must pay landlords for lost tax abatements. Adding to the potential chaos, Stephen Meister, a partner who specializes in real estate law at the firm Meister Seelig & Fein, said he had spoken with building owners who might want to leave the city-run J-51 tax abatement program altogether. [more]