A venture led by Tishman Speyer Properties is giving up the Peter Cooper Village and Stuyvesant Town apartment complex in Manhattan to creditors, marking the collapse of one of the largest transactions during the U.S. real estate boom.
In a statement, a spokesman for the venture said it had no intention of putting the roughly 11,200-apartment property in bankruptcy, and that it became clear in the last few days that the only viable alternative was to transfer control and operation of the property to lenders.
Tishman Speyer and a unit of BlackRock Inc created the PCV ST venture to buy Stuyvesant Town/Peter Cooper Village from MetLife Inc for $5.4 billion in 2006, as the real estate market and availability of credit were cresting.
The venture defaulted on its mortgage this month, and the value of the complex is believed to have fallen to $2 billion or less.
MetLife originally built the complex for returning World War II veterans and other middle-class tenants. More than 25,000 people live in 56 buildings there.
The venture had hoped to increase rents on the complex's rent-regulated apartments to higher, market levels, but New York's highest court in October rejected its efforts.
Tishman Speyer said it would not consider a long-term management contract to operate the property that did not also include ownership.
It offered to continue managing the property for an interim period to make the transition smooth and seamless for the residents.
(Reporting by Bhaswati Mukhopadhyay in Bangalore and Jonathan Stempel in New York; Editing by Jon Loades-Carter and John Wallace)