Partners Near Default on Stuyvesant Town

I wish I could miss a $16MM payment and only be in "technical" default.

Unfortunately, the tenants' situation with regard to Tishman-Speyer's troubles may turn into an example of "Be careful what you wish for."

west81, why, in your opinion?

Inquirer: Nothing specific. I just mean that the relationship between landlord and tenant - hostile as it often may be - is fundamentally symbiotic. The landlord needs a return on investment and preservation of property; the tenant needs shelter and essential services. Although one side's loss is sometimes the other's gain, it's not a zero-sum game. When either party faces too much adversity, the adversary is likely to suffer too. For example, when tenants are stressed, rent may go unpaid, or crime may infiltrate. When the landlord is hurting, facilities and services may deteriorate.

Of course, either party can cut corners or neglect responsibilities even in the best of circumstances, but it's much more likely in hard times.

I think I thought the same thing but in blunter terms: it's pretty obvious that the whole complex is on its way to become a regular project. With all the consequences.

Oddly services have improved markedly the past couple of months. Our hallway has needed painting for over a year. About two weeks ago someone painted it. The washing machines are being repaired. I think having the special debt overseer around to give ts the go-ahead for certain expenditures has been and will continue to be very helpful. ts also has been very pleasant recently.

West81st, I don't think the relationship is symbiotic if it is based on the landlord kicking out the tenants.

Painting and laundry rooms repairs are the first sign that the city's paw is in it. Sorry for all living there. Actually, the old folks (the only deserving part of the setup) are going to be OK. The rest had a nice ride while it lasted. Socialism for some only doesn't work. Luckily.

What's more, who's going to pay property taxes now? We all know how the city loves its property tax; there will be a mechanism that will put the money into the city's pocket.

west81st, well put

Alas, yet again, the New York Times mixes up its terminology (where did they get Andrew Ross Sorkin? - but I digress!). Technical default is default on a covenant. If the partners do not make the payment, they will be in debt service default.

I think they mean, "they will technically be in default," the implication being that the creditors aren't going to take any action against them for it.

But I could be wrong....

inodada: Go back to your Biology 101 text. Symbiosis doesn't preclude a predator killing the more vulnerable, careless, or succulent members of the herd.

The remaining prey aren't necessarily better off with the predator extinct, and the predator doesn't necessarily thrive by eating the whole herd in a single meal.

"succulent"

Yum.

Is "symbiotic" synonymous with "screwed"?

so a cessation of parasitic symbiosis wouldn't be beneficial to at least one of the parties?

inquirer, the city couldn't give a rat's ass whether or not my hallway is painted. ts had an obligation to minimize losses, and thus was spending as little as possible. the special debt servicer (or whatever the hell it's called) came in, and now it makes the decisions to spend or not to spend. they're calling the shots now. ts as much as said so in a recent letter to former market rate tenants in which it set forth the next few months of negotiations between the parties.

i can imagine a couple of potential negative outcomes, but i can imagine far more that improve upon the past few years.

To have a specific entity, however unsavory, as a landlord is, I think, much more preferable than a giant, faceless bburocratic monster. Always.

inquirer, we'll get another landlord. it may take awhile. but in the meantime i'm fairly certain we'll have heat and hot water and the like.

and even if it were to be the city (which i highly doubt, but who knows, these are strange times), these tenants are organized beyond belief. this is hardly your typical underrepresented group. Dan Garodnick lives here, as just one example.

AR, sounds like the preamble to a debtor-in-possession situation with a special master or bankruptcy trustee controlling operations.

Yikes.

New Jack City

West81st, I stand corrected. What do they call it when the prey eats the predator?

"I have been told of a certain sea snake which has a very unusual method of attracting its prey. It will lie at the bottom of the ocean as if wounded. Then its enemies will approach, and yet it will lie quite still. And then its enemies will take little bites of it, and yet it remains still."

"So, we will lie still, and let our enemies come to us and nibble."

TO answer your first question: some call it social justice; others call it communism.

aboutready: this is definitely perfectly organized group of people with a uniquely strong sense of entitlement. History (see West81st's comment above) is unkind to this sentiment, in the long run. So a project is as a project does. I' for one, see this turn of events as a huge disadvantage to the city as a whole.

Gladiator. Not an exact analogy, but still a nice reference.

Whatever,

Let the tenants buy it for $2M. $2M/11,250, $177K an apartment on average.

Bring It!

inquirer, yes, what a sense of entitlement. to expect a landlord to honor the terms of a lease. in the long run? you mean like over 50 years? or will it be 70? or 80?

rraphael, i think you mean $2 billion.

How come there's no unhide next to LICC?

Will the default push TS into renting unrenovated apartments at below market rate or am i dreaming??

not necessarily, julia.

Ah steve, obsessed with me as ever . . .

How's your view of StuyTown, LICC, from - over yonder?

How does stuytown owners defaulting on loan payments different from the situation bemoaned in an article lnked to in another thread, "Gentrification Hangover"?

having a bad grammar day - "how does ... differ" - sorry

"What's more, who's going to pay property taxes now? We all know how the city loves its property tax; there will be a mechanism that will put the money into the city's pocket."

The City always comes first in the priority of liens; before the first mortgage even if the lien comes afterward. No need to worry about the taxes getting paid (eventually; and certainly at any sale).

"I think I thought the same thing but in blunter terms: it's pretty obvious that the whole complex is on its way to become a regular project. With all the consequences."

I totally disagree, if you are using the term "regular project" in the pejorative "low income housing project". The middle class housing base is too strong.

My appologies to AR about this next statement:

Perhaps people are looking for the term "parasites" and "host" here? (lol)

Very often, when there is bad blood between a landlord and tenant, change in ownership signifies a new stepping off point for clean start of more good faith negotiations. While I don't mean to portray this is the norm, I know of many instances of a Sponsor who has carried unsold apartment for years with no success of buying out RS/RC tenants, and as soon as they sell the unsold shares, the new holder instantly starts doing deals with them because there is no more "I wouldn't sell out to that bastard for all the tea in China". I remember buying a first floor unit at ?17 West 71st St? with a RS tenant who have been there for years which we picked up when the holder died and I guess the estate didn't feel like picking up the shortfall anymore and made a deal with the tenant within a week or two.

Anyway, where is the "news" here? Everyone knew this was coming (even before the recent j-51 ruling) for a long time now. The news will come when we see who gets totally wiped out in the mezzanine financing group, and what they try to do about it.

no problem 30yrs, happy to see you weigh in here.

yes, many saw this coming from the beginning. as i have said often, i haven't particularly enjoyed the ratty grounds, lack of washers, lights out in the hallways, etc., but i've understood it. but for TS's relentless pursuit of RS tenants i would have just felt that they simply made a horrific mistake in the purchase, understandable to the extent that it was all-too consistent with the general consensus of market direction at the time. i didn't concur with the general consensus, something i seem to be doing frequently.

now that the case is over things can proceed. and they will. but to say this will become a "project" seems to me to be wishful thinking on the part of some.

the whole parasite/host relationship is often complicated. and it is true that substituting one predator for another is not necessarily an improvement. but the juiciness of the prey seems to have been diminished, which i can only think is an improvement, under the circumstances.

go away in a huff!

lowery, sorry, missed your post. i'd think the major difference is these buildings are mostly occupied, no? and to the extent they're not, they don't need to be sold so that the sponsor relieves itself of the burden of common charges. once the excess debt is cleared out here i believe the complex is reasonably profitable, if not a money machine.

It will be interesting to see if lenders or investors sue their attys for malpractice for not having
flagged the J-51 issue. Could cost some law firm lotsa money.