New York magazine has a lengthy story on the largest real estate deal deal in US history: The $5.4 Billion sale of MetLife's interest in the Stuyvesant Town and Peter Cooper Village residential complex. The complex is enormous: 80 acres of land on Manhattan's East Side, 25,000 residents, 110 buildings, over 11,000 units, 2,260 enclosed parking spaces, and 110,000 square feet of retail space. The complex stretches from 14th Street to 23rd Street.
The article, Clash of the Utopias by Gabriel Sherman, starts with the history of the complex. It was an ambitious post-war slum reclamation project. It was intended as middle class oasis in the expensive heart of the city. The vast majority of units are rent-stabilized.
The purchase price was high. According to the story, the rent flow from the property was less than the debt payments. The new owners would need to kick-out illegal rent-stabilized tenants. They would need to raise rents.
Since the time of the acquisition, the real estate market has changed. The story points out that they had to decrease rents and offer incentives to get vacant units rented.
I believe most of the key people and investors in the transaction knew this was a long term deal that would not result in a quick flip for cash. A complex this big does not move quickly. But, it is hard to resist a tract of land this big in the middle of Manhattan. There were lots of bidders who wanted the project.
The story spends a big chunk of space talking about the Speyer family and their family business.
The comments to the story are biting and largely critical of the new owners and their stewardship of the complex.
[For full disclosure, my former firm represented parties in the transaction and played a significant role in the acquisition, financing and other items mentioned in the story. I had no active role. BlackRock/Tishman Acquires Stuyvesant Town and Peter Cooper Village for $5.4 Billion. Deal of the Year. Fund Formation of the year.]