Monday, January 25, 2010
AIB now landlord of Stuyvesant Town in New York
It's got to be one of the great ironies of the global property crash.
Allied Irish Bank, already hobbled with toxic debt from Irish property buyers, is now the partial landlord of some 25,000 people in 11,227 units in New York.
AIB is one of three banks which financed Tishman Speyer and Blackrock's $5.4bn acquisition of Stuyvesant Town and Peter Cooper Village, the historic 80-acre apartment complex on the Lower East Side, in what was the most expensive real estate deal EVER in America.
The 2006 purchase sparked near revolt by the mostly rent-controlled residents at the two complexes over Tishman Speyer and Blackrock's planned high-end rental flip.
TS&B planned on renovating the apartments and building new amenities like a gym and gardens and then raising the rents substantially beyond the reach of the city's workers who made their homes there.
It would gentrification, high-end style.
However, the developers - who are supposed to be some of the cleverest people in real estate - bought at the very top of the market and have never been able to finance their vision.
They spent the past two months scrambling for a deal to cover their $3bn debt.
To add salt to their over-extended wounds, New York's highest court told them their "improvements" so far weren't enough to warrant rent increases.
AIB and the other two banks sent a formal letter to TS&B a few weeks ago warning that they could be subject to foreclosure.
Such a foreclosure would be the second-largest default of a US commercial mortgage-backed security.
Monday, TS&B said they would turn over the properties to the AIB and the other two creditors.
Of course, this is now uncharted water for AIB and its shareholders.
Posted by Southofdub at 10:06 AM