Tishman Loses Stuy Town Fight; May Have to Pay $200 Million, Default
When Tishman Speyer Properties took thousands of units in Stuyvesant Town and Peter Cooper Village -- longtime middle-class bastions on the edge of the hyper-gentrified East Village -- out of regulation and raised rents, tenants sued and a court found that the properties could not be deregulated, because Tishman and former owner Met Life enjoyed J-51 tax breaks and building assistance from the city. So Tishman took the case to the
Second New York State Court of Appeals, which today upheld the previous court's ruling.
This is a hard blow to the realtor, which may have to pay back as much as $200 million in back rent and damages. Tishman and partner Black Rock Realty bought the complexes for $5.4 billion in 2006; higher rents were apparently part of the deal. Now that Tishman is looking at lower revenues in the long term as well as a big payout -- whether in cash or in future rents -- and depreciation has brought the complexes' value down to about $2 billion, experts says that default is probably the next step.
Meanwhile Tishman Speyer, perhaps anticipating this result, has reportedly ordered a wave of inspections in the complexes, by means of which they may move to evict some tenants for violations.
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