This October will mark 10 years since one of the biggest tidal waves in New York City real estate history came crashing down on our shores: the $5.4 billion sale of Stuyvesant Town-Peter Cooper Village to Tishman Speyer and BlackRock. Until recently, it was the largest real estate transaction in United States history (the jury is still out on whether the sale of the same property last December was a tad higher).
Given the anniversary and that our Sit-Down this week is with the woman who sold it, let’s take a look at the big plot points of the 2006 deal:
The Buildings: While Metropolitan Life Insurance built them as separate planned communities in the late 1940s, Stuyvesant Town and Peter Cooper Village now comprise 11,232 apartments in 110 buildings. At the time of the sale, rent stabilization made many of them affordable. The buildings were also covered by the J-51 tax break, which incentivizes landlords to make capital improvements to existing properties. The abatement would be the subject of a major lawsuit in the following years as the owners tried to deregulate thousands of units.
The Bidders: Tishman Speyer was by no means the only real estate powerhouse that bid on the project when MetLife, the original developer, put the property up for sale. Bidders included real estate dynasties such as the LeFraks, the Dursts and the Rudins, along with Related Companies’ Stephen Ross and Vornado Realty Trust’s Steven Roth, according to Charles V. Bagli in Other People’s Money, his 2013 book detailing the sale and subsequent default.
The Agreement: Mr. Bagli also got the scoop on the overnight negotiations between Tishman Speyer, BlackRock and MetLife executives. It began with a phone call from CBRE’s Darcy Stacom, who oversaw the auction of the property, around 5 p.m. on Oct. 16, 2006, inviting the Tishman execs to come to law firm Greenberg Traurig’s offices at 200 Park Avenue. An agreement was made at 9:30 a.m. on Oct. 17.
The Price: There are two actual numbers that account for the sale: $5.4 billion and $6.3 billion, either of which still made the sale the largest in U.S. real estate history. MetLife and the buyers agreed to the sale at $5.4 billion, and the other $900 million was raised for improvements to the properties, plus the buyers established a reserve fund to pay interest on the debt. But in a wild peak of the real estate cycle, most of that cost was covered by lenders and Tishman Speyer put down a mere $56 million of its own money.