Stuy Town Owners Back in Court to Defend Jacked-Up Rents

After nearly three years of veritable civil war between two powerful real estate executives and thousands of tenants, the owners of the historic downtown residential complexes, Stuyvesant Town and Peter Cooper Village, will appear in court again today.

Landlords Jerry and Rob Speyer, and their partner, private equity giant BlackRock Realty, will face an Albany appeals court judge in an attempt to overturn a March verdict which said that the landlords owed hundreds of million dollars in rent rebates.

At issue in the case is whether Tishman Speyer (the company headed by Rob and his pop, Jerry) was allowed to deregulate apartments that had been rent-stablized for thirty years...

Landlords who buy properties with a certain number of rent-stabilized units receive special tax breaks. Tishman Speyer received the tax breaks, but then immediately began deregulating the apartments and selling them at market rate.

On March 5, a State Supreme Court said that Tishman Speyer couldn't do that: since the company had received beneficial tax breaks for buying rent-stabilized properties, in what are known as J-51 buildings, they couldn't turn around and deregulate them.

Until the judge decides, tenants who have eviction notices are being told to sit tight. The case has potential implications for literally hundreds of thousands of tenants throughout New York.

The $5.4 billion real estate deal to buy 110 apartment buildings was the biggest in New York City history and required $4.4 billion in loans (Yes, the numbers are in billions). Yesterday, the Times reported that Tishman Speyer is on the brink of defaulting on that enormous loan. The company may have the cash to hold out until September or February.

Defaulting on the loan might not be so terrible for everyone else involved. If you take the case of the Sheffield57, an Upper West Side luxury condo conversion that collapsed under poor management and tenant lawsuits, the residents were delighted when the owner Kent Swig defaulted on his loan. The well-heeled residents ended up getting a new owner, and said they were delighted.