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Tishman Walks on Stuy Town

January 25, 2010

Tishman Speyer and company has decided to throw in the towel on Stuyvesant Town. This comes as little surprise as they were so far under water on the deal that it would be rather meaningless for lenders to keep them in the deal. Tishman originally paid $5.4B for the asset back in 2006 and without an opportunity to retain ownership, they said they “were not interested” in managing the property either, from which they earned about $10m in fees annually. Sure.

“It has become clear to us through this process that the only viable alternative to bankruptcy would be to transfer control and operation of the property, in an orderly manner, to the lenders and their representatives,” the venture said in a statement to The Wall Street Journal. “We make this decision as we feel a battle over the property or a contested bankruptcy proceeding is not in the long-term interest of the property, its residents, our partnership or the city.”

Tishman Speyer itself put in about $112m into the deal, with the balance being funded by other equity and debt investors. The value of the asset now is down to about $2B, wiping out a whole slew of investors, including the fabled CalPERS.

By some accounts, Stuyvesant Town is only valued at $1.8 billion now, less than half the purchase price. By that measure, all the equity investors—including the California Public Employees’ Retirement System, a Florida pension fund and the Church of England—and many of the debtholders, including Government of Singapore Investment Corp., or GIC, and Hartford Financial Services Group, are in danger of seeing most, if not all, of their investments wiped out.

CalPERS was making some outlandish investments, and this was pretty high up there on the list. Now the FCIC (financial crisis inquiry commission) is led by good Phil Angelides, former California state treasurer and former CalPERS board member. This should make the inquiry into the financial crisis so much better and easier.

[via WSJ]

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Categories: Commercial Finance and Lending | Commercial Real Estate Investing | Notable Deals
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Comments
joshua January 26, 2010


this happened a lot quicker than i thought. but it makes more sense to call it a day early and stop bleeding money.

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