Killing it like a hooker in Hong Kong

Temasek/GIC Tracker

This just in, looks like SingGov is going to have a piece of one of the largest single property real estate defaults in the world: the Stuyvesant Town and Peter Cooper Village in New York. This is what you get for participating in real estate mezz loans in 2007, taking equity risk with capped return.

To be honest, this worked out unfortunately for Tishman Speyer and Blackstone more because of local NY politics. Their calculations about converting rent control apartments seem to have been sound, but they underestimated how socialist the US has become lately.

Numbers time:

At Stuyvesant Town, there is a $3 billion first mortgage, or commercial mortgage-backed security, and a $1.4 billion second loan, known as “mezzanine debt” held by SL Green, the government of Singapore and others.

Finally, there is $1.9 billion in equity put up by Tishman Speyer, BlackRock and their investors. Tishman Speyer, which generally earns development and management fees from the properties, has about $56 million of its own money in the deal.

USD3.0 b first lien
USD1.4b mezz
USD1.9b equity
USD6.3b total purchase price

Current estimated value of property, drum roll please USD2.2b.

All of the equity, all of the mezz and 30% of the first mortgage has been wiped out. But Tishman Speyer only put in USD56mm and received management rights. It was basically call option premium plus purchase of a cash flow stream for them. If the other investors syndicated widely, it probably ended up being NYC real estate call options for all of them.

September 10, 2009 Posted by | Uncategorized | 3 Comments