The trustees of Florida's pension fund have been told that the fund has probably lost $250 million it had invested in a limited partnership that owns Stuyvestant Town and Peter Cooper Village along the East River in Manhattan and is run by Tishman Speyer Properties LP and Blackrock Inc.
An article on Bloomberg by Jerry Hart quoted Ash Williams, executive director of the Florida State Board of Administration that oversees $121.9 billion of pension funds and other assets, as telling a meeting of the trustees in Tallahassee today that "we are carrying that investment at zero because the market softened dramatically."
"What's going to happen to the investment?" Florida Attorney General Bill McCollum, a Republican running for governor in the November 2010 election, was quoted in the article as asking Williams. "'Is there potential for recovery? Yes,' Williams said. 'Is it a strong possibility? No.'"
Tishman Speyer and Blackrock acquired the two adjoining residential complexes that contain 11,200 apartments in 2006 for $5.4 billion. The State Board of Administration bought its share of the partnership in 2007 and Mr. Williams, who was formerly a managing director at Fir Tree Partners, a hedge fund, was hired last October, according to the Bloomberg article.
"Fitch Ratings on Aug. 28 cut its ratings on $3 billion of mortgage-backed securities used by Tishman and Blackrock for the Cooper-Stuyvesant purchase," the article continued, "because the partnership will deplete a $400 million reserve fund for debt service by the end of the year. The reductions, involving 16 separate ratings, ranged from BBB-, the lowest investment grade, for $107.4 million in debt, to B-, the sixth-lowest non-investment grade, covering $115.4 million in obligations."
The article maintained that Fitch said in a report that 'Cash flow generated from the property remains significantly below what is needed to service the current outstanding debt."
The Appellate Division of the New York State Supreme Court gave permission in April to Tishman Speyer Properties and BlackRock Realty, the owners of the huge Stuyvesant Town and Peter Cooper Village residential enclaves along the East River 14th and 23rd Streets to appeal its March 5 ruling that they had wrongfully deregulated rents while receiving tax breaks from the city.
The court's ruling in March had been unanimous and could not normally be appealed unless the court granted permission.
The Appellate Division's action included a stay of its decision but required that the owners put the differences between the rents it charged at 4,400 apartments and the rent it would have charged were the apartments still regulated in an interest-bearing account.
The two complexes, which were built by MetLife after World War II with public subsidies and the powers of eminent domain, have a total of 110 red-brick buildings. About 25,000 people lived in the complexes. There were 8,037 rent-stabilized apartments when Tishman Speyer acquired the properties and as of last May there were 7,297.
The court decision was in a case brought in 2007 by tenants against Tishman Speyer that alleged that their rents had been improperly deregulated.
The owners have been planning to convert rental controlled apartments in the complexes to market rate rents.
An article on Bloomberg by Jerry Hart quoted Ash Williams, executive director of the Florida State Board of Administration that oversees $121.9 billion of pension funds and other assets, as telling a meeting of the trustees in Tallahassee today that "we are carrying that investment at zero because the market softened dramatically."
"What's going to happen to the investment?" Florida Attorney General Bill McCollum, a Republican running for governor in the November 2010 election, was quoted in the article as asking Williams. "'Is there potential for recovery? Yes,' Williams said. 'Is it a strong possibility? No.'"
Tishman Speyer and Blackrock acquired the two adjoining residential complexes that contain 11,200 apartments in 2006 for $5.4 billion. The State Board of Administration bought its share of the partnership in 2007 and Mr. Williams, who was formerly a managing director at Fir Tree Partners, a hedge fund, was hired last October, according to the Bloomberg article.
"Fitch Ratings on Aug. 28 cut its ratings on $3 billion of mortgage-backed securities used by Tishman and Blackrock for the Cooper-Stuyvesant purchase," the article continued, "because the partnership will deplete a $400 million reserve fund for debt service by the end of the year. The reductions, involving 16 separate ratings, ranged from BBB-, the lowest investment grade, for $107.4 million in debt, to B-, the sixth-lowest non-investment grade, covering $115.4 million in obligations."
The article maintained that Fitch said in a report that 'Cash flow generated from the property remains significantly below what is needed to service the current outstanding debt."
The Appellate Division of the New York State Supreme Court gave permission in April to Tishman Speyer Properties and BlackRock Realty, the owners of the huge Stuyvesant Town and Peter Cooper Village residential enclaves along the East River 14th and 23rd Streets to appeal its March 5 ruling that they had wrongfully deregulated rents while receiving tax breaks from the city.
The court's ruling in March had been unanimous and could not normally be appealed unless the court granted permission.
The Appellate Division's action included a stay of its decision but required that the owners put the differences between the rents it charged at 4,400 apartments and the rent it would have charged were the apartments still regulated in an interest-bearing account.
The two complexes, which were built by MetLife after World War II with public subsidies and the powers of eminent domain, have a total of 110 red-brick buildings. About 25,000 people lived in the complexes. There were 8,037 rent-stabilized apartments when Tishman Speyer acquired the properties and as of last May there were 7,297.
The court decision was in a case brought in 2007 by tenants against Tishman Speyer that alleged that their rents had been improperly deregulated.
The owners have been planning to convert rental controlled apartments in the complexes to market rate rents.
Architecture Critic
Carter Horsley
Since 1997, Carter B. Horsley has been the editorial director of CityRealty. He began his journalistic career at The New York Times in 1961 where he spent 26 years as a reporter specializing in real estate & architectural news. In 1987, he became the architecture critic and real estate editor of The New York Post.
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