NEW YORK - Tenants in a vast New York City apartment complex and owner Tishman Speyer on Friday said they had opened talks to settle a rent clash, one day before a planned rally against the landlord.
New York's top court on October 22, ruled that Tishman Speyer and the real estate arm of money manager BlackRock Inc, which paid $5.4 billion for Stuyvesant Town and Peter Cooper Village in 2006, had wrongly raised thousands of the apartment complex's rents.
Representatives for the property owner and Alexander Schmidt of Wolf Haldenstein and Bernstein Liebhard, the counsel for the plaintiffs initiated good-faith discussions late last month designed to develop a framework for quickly resolving the issues left open by the Court of Appeals decision, Tishman Speyer and tenants said in a statement on Friday, referring to the October 22 ruling.
The court decision helped push a $3 billion loan on the project closer to default, which could occur in December, unless the tenants and the landlord resolve issues including how many years tenants paid rents that were too high, how much their damages amount to and what should the new rents be.
Both parties are committed to working together to achieve an expedited resolution of the Roberts case, the joint statement added.
Lenders could prove wary of refinancing loans for the sprawling Manhattan apartment complex until the legal clouds are lifted. Resolving the clash in the courts might take years and the tenants' damages could total up to $600 million.
Friday's statement did not mention MetLife, which used a similar strategy to boost returns as the current owners: pushing out tenants of rent-regulated apartments in favor of renters who could pay higher market rents.
The insurer sold the 80-acre complex where 25,000 people live to the Tishman Speyer-BlackRock Realty Advisors joint venture in one of the nation's biggest property deals, just before the market's peak.
One week ago, the $3 billion loan for the project was transferred to the special servicer, CWCapital after Tishman Speyer and BlackRock asked for relief from debt service.
We requested it now so we can begin to negotiate a restructuring before it goes into default, a Tishman Speyer spokesman said.
The list of investors includes California pension funds, the Government of Singapore Investment Corp and many others.
Stuyvesant Town and Peter Cooper Village were built in the late 1940s for World War Two veterans, police officers, teachers and the like, and City Councilman Dan Garodnick said the court ruling returned more than 4,000 of the 11,200 apartments to the rent regulated system.
The Democratic Councilman on October 26 wrote Fannie Mae and Freddie Mac, the U.S. home finance agencies, asking them to use their ownership of substantial portions of the senior debt of Stuyvesant Town/Peter Cooper Village ... to become part of the solution to this community's challenges.
Saying the two agencies failed to back a competing bid for the complex by the tenants in 2006, Garodnick noted that they were both later saved by getting taxpayer bailouts.
Any debt refinancing must: protect Stuyvesant Town and Peter Cooper Village for the middle-class, preserve its open space and historic configuration, and keep it as unified community, he said.