Both sides in the court case concerning Stuyvesant Town-Peter Cooper Village, one of the largest disasters in modern commercial real estate and mayor disrupter of the CMBS market as a whole, agreed to a settlement.
The case, Roberts v. Tishman Speyer Properties, will help lay the groundwork for alleviating remaining issues surrounding the soured NYC apartment complexes. A full run down of the Stuy Town saga can be found here.
In short, MetLife (MET) agreed to sell the property in 2006 to BlackRock (BLK) and Tishman Speyer for $5.4 billion. The tenants filed a class action lawsuit against the ensuing rental policies and blocked the sale.
According to Deutsche Bank (DB) analysis, the terms of the settlement are still subject to tenant and state and federal approval. But the terms are set.
The bank’s analysts report $68.75 million will be set aside to compensate for the rent overcharges for the period of time between 2003 and 2011. Each member of the lawsuit will get about $3,200.
The special servicer, CWCapital, once accused of blocking progress, will contribute $58.25mm and Metlife will contribute $10.5 million to this fund. CWCapital will also forfeit $75.7 million in unpaid rent from the last three years. Rents will remain controlled until 2020 and then can rise to market levels.
Additional advances will increase the total outstanding on the five related CMBS to approximately $350mm, or 12% of the unpaid principal blance, according to Deutsche Bank analysis.
Deutsche Bank analyst Harris Trifton and Dave Zhou write that the results of the settlement announcement should not be diminished.
“It has removed the last significant obstacle which needed to be cleared before a sale could take place,” they write. “This is the beginning of the end. It is a positive event and we expect a meaningful reaction in the levered bonds from the five deals.”
jgaffney@housingwire.com
