The Government of Singapore Investment Corporation (GIC) is reported likely to lose up to $575 million (about 800 million Singapore dollars) in what is being called "the biggest real-estate blunder in American history".
Read The Biggest, Baddest Real-Estate Loan in New York magazine to learn all about the $5.4 billion property on Manhattan's East Side whose backers now can't pay off a $16 million debt.
The Wall Street Journal reported:
Tishman Speyer and BlackRock Inc. said Friday that they wouldn't make a full scheduled debt payment to senior lenders on Stuyvesant Town and Peter Cooper Village, triggering default and leaving one of New York's largest apartment complexes in limbo.
CWCapital, the special servicer acting on behalf of the lenders, …. is expected to issue a notice of default over the payment, scheduled to be $16 million.
The $133 billion Florida State Board of Administration pension fund, which committed $250 million to the 56-building, 11,000-apartment property, already "counts the value as zero", the Wall Street Journal reported in October. It said then:
The sprawling Manhattan apartment complex known as Peter Cooper Village and Stuyvesant Town — acquired for $5.4 billion in 2006 by a venture of Tishman Speyer Properties and a unit of BlackRock Inc. — is running out of cash…
Realpoint estimates that the property is worth only $2.1 billion now, less than half of the purchase price. By that measure, all the equity investors and many of the lenders, including Government of Singapore Investment Corp., or GIC; Gramercy Capital Corp.; and SL Green Realty Corp., are in danger of seeing most, if not all, of their investments wiped out.
The Journal put the GIC stake at $575 million.
Investors staring at multimillion-dollar losses include:
- The California pension fund, Calpers, which put in $500 million, and
- The Church of England ($70 million).
The Journal reported:
The apartment complex was developed by MetLife for returning World War II veterans and remained a middle-class bastion even as rents in other parts of Manhattan skyrocketed. New York's strict regulations prevented the owners from raising rents.
But New York rent rules were eased over the years. When the Tishman/BlackRock venture purchased the property from MetLife in late 2006, the new owners predicted they would be able to convert thousands of protected apartments to higher market rents…
The new owners ran into a slowing economy and resistance from tenants that battled to block rent increases.
Related posts:
What is the ST correspondent doing? Is she still writing abt grass in Washington DC? We pay pay reporters to report, what is she doing?
The Straits Times is running a story now. Saw it online.