TradecoHoldco

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.

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September 10, 2009 - Posted by | Uncategorized

3 Comments »

  1. Last I checked Fortress refinanced Lehman out of a chunk of their senior on this.

    Comment by Nemo Incognito | September 17, 2009

  2. Ah, hopefully at a sufficient discount for it to make sense. Although if Lehman gave them leverage and they bought it at 95 cents or thereabouts, they might have still made out like bandits.

    Comment by vanderghast | September 18, 2009

  3. I think this was in June/July last year or thereabouts so hopefully there wasn’t any counterparty risk in this or else they might have been just another repo creditor trying to get more than 15 cents on the dollar which is where the senior claims are trading now. Ouch.

    Comment by Nemo Incognito | September 18, 2009


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