A New York City Housing Court judge has ruled that a market-rate apartment at 37 Wall Street should be rent-stabilized because the owner has been receiving 421-g tax abatements from the city. The decision, reminiscent of last year’s Stuyvesant Town case, in which the state’s highest court ruled that landlord Tishman Speyer had illegally deregulated units while receiving J-51 tax abatements, could mean a return to rent-stabilization for thousands of Financial District apartments. Unlike the J-51 tax break, which was issued to developers throughout the city, the 421-g was given out exclusively to commercial landlords in Lower Manhattan for residential conversions. The landlord at 37 Wall Street, W Associates, had argued that because the rent was over $2,000, the building should be exempted from stabilization. “As the Court of Appeals concluded in Tishman Speyer, [the owner]
cannot take advantage of the luxury deregulation exclusion of the Rent
Stabilization Law while simultaneously receiving benefits under the
program,” Judge Bruce Scheckowitz wrote in his decision. According to the Downtown Express, there are at least 16 rental buildings below Murray Street currently receiving 421-g tax abatements, including 200 Water Street, 63 Wall Street ant 90 West Street. The decision sets a precedent for similar lawsuits from tenants in close to 5,000 units in those buildings. [Downtown Express] and [Crain's]

Tishman Speyer and BlackRock, the owners of Stuyvesant Town and Peter Cooper Village, will not make today’s scheduled $16 million mortgage payment to senior lenders for the East Side apartment complex, the companies have confirmed in a statement.

Reports surfaced this morning that a technical default on the loan was imminent, though the news was hardly surprising to the city’s real estate community, which has been closely watching the beleaguered property in recent months. In November, Tishman Speyer and BlackRock entered negotiations with special servicer CWCapital to restructure $3 billion in debt for Stuyvesant Town, and speculation abounded that its reserves could be depleted before the close of 2009.

The partners purchased the 110-building complex in 2006 for $5.4 billion; the most recent appraisal valued it at just $1.9 billion.

“Today’s announcement has no immediate impact on tenant services or the day-to-day operations of the community,” the companies said in the statement. Furthermore, the statement said, “the debt for Stuyvesant and Peter Cooper Village is secured exclusively by the property and is not cross-collateralized with any others. It does not impact, nor is it impacted by, any other properties in which Tishman Speyer or BlackRock may be invested.” TRD
[more]

Stuyvesant Town could see dozens of new tenants in the new year, according to a statement released today from a spokesperson from Tishman Speyer. About 100 vacant apartments at the residential rental complex will be available for rent beginning Jan. 4 and will be assigned to current rent-stabilized tenants as well as those who have sat on the development’s waiting list. These new tenants will have similar contracts to those who already live in rent-stabilized units, according to the written statement. “As is the case with current residents, each new resident will be afforded the rights of automatic lease renewal and succession rights available to rent-stabilized tenants,” the statement read. The move comes after a New York State Court of Appeals ruled in October that Tishman Speyer did not have the right to deregulate rent-stabilized apartments in Stuyvesant Town and Peter Cooper Village. The management company has seen its reserve fund dwindle in recent months and in our August issue, The Real Deal named Tishman’s purchase of the housing development one of the worst deals made since the credit crunch. TRD [more]

In the wake of the potentially crippling state appeals court decision over rent destabilization at Stuyvestant Town and Peter Cooper Village last month, the complex’s owners are creeping closer and closer to default. The Wall Street Journal reported last month that Tishman Speyer Properties and BlackRock could likely stave off default until February on the property they acquired for $5.4 billion in 2006. But that was before the landmark Oct. 22 ruling, which meant the companies might be forced to pay back $200 million in rent overcharges to tenants whose apartments were illegally deregulated. Now, credit rating agency RealPoint has said the owners have only $6.75 million left in reserves for Stuy Town, which reportedly burns up around $16 million each month. “We could easily see them go delinquent in December,” said Steve Kurtitz, senior vice president at RealPoint. Another source told the New York Post that while default is inevitable, it is more likely to happen in January. [Post]

Jerry Speyer, founder of Tishman Speyer, owner of Stuy Town and Peter Cooper Village

The New York state Court of Appeals ruled today that the owners of Stuyvesant Town and Peter Cooper Village should not have deregulated the rent-stabilized apartments in the 11,000-unit complex, because the firm had been receiving tax breaks for renovations at the time. Nine tenants charged in a suit that the owners, Tishman Speyer Properties, BlackRock Realty, and the former owner, Metropolitan Life, had illegally increased rents on one quarter of the units to market rates. The decision, which upholds a March ruling by the Appellate Division of the State Supreme Court, could have sweeping effects on landlords across the city. Half the city’s apartments are currently regulated, and the defendants argued that the decision would set a precedent against deregulation of rent-stabilized apartments that would be financially unbearable for building owners. The decision also means Stuy Town’s investors, who are already strapped for cash on the $5.4 billion project, could be forced to pay $200 million in rent overcharges to tenants whose apartments were illegally deregulated. Even before that expense, the company is reportedly in danger of default on its loans for the complex. TRD