Aaron Jungreis, president of the Rosewood Realty Group, and Stuyvesant Town

Yesterday’s court ruling handing down a victory to tenants at the mostly rent-regulated apartment complex Stuyvesant Town and Peter Cooper Village has an immediate effect on the sale of a number of properties in New York City, industry insiders said. In one instance, an apartment sale could now be canceled; in a second a seller may have to cut a Brooklyn property’s valuation; and in a third, an owner sought to rush a sale to unload his Midtown apartment building. In all of the cases, the dealmakers said, the sellers or buyers were reacting to the court ruling yesterday by the state’s highest court, the New York Court of Appeals, that upheld a lower court decision against Tishman Speyer Properties and BlackRock Realty, owners of the 110-building complex on Manhattan’s East Side. The court said the landlords improperly raised rents and deregulated thousands of apartment units while benefiting from special tax incentives in the so-called J-51 program. [more]

The New York state Court of Appeals will hear a case tomorrow on whether landlords are allowed to deregulate rent-controlled apartments while receiving J-15 tax abatements for building improvements. The case is an appeal of the March judgment against Tishman Speyer, owner of Stuyvesant Town and Peter Cooper Village, in which the court found that it had illegally deregulated units in the two apartment complexes. If the decision is upheld, Tishman could be forced to return $200 million in overpaid rent to tenants. This would be a punishing blow to the embattled management company, which has seen its reserve funds dwindle to $49.6 million.

Tishman Speyer Properties was granted the right to appeal the New York
State Appellate Court’s decision that the developer illegally
deregulated rent stabilized apartments in Stuyvesant Town and Peter
Cooper Village. The Appellate Division ruled last month that Tishman
and the complexes’ former owner, Metropolitan Life, should not have
deregulated apartments while receiving the J-51 tax abatements, which
are given for making building improvements. The ruling would have
required Tishman and other landlords to re-regulate apartments and pay
tenants the difference between the market rents they were paying and
the regulated rents. [more]