Stuyvesant Town

Another blow to commercial real estate. Bloomberg reports that tenants have won a lawsuit against Tishman Speyer Properties, which had argued that when they bought the property, the sale deregulated rent controls, allowing them to raise rents. The judge disagreed, noting that the complex had been built with city assistance and benefited from tax breaks. The company may owe millions in triple-damage rent refunds.

“The tenants argue the current and former owners of the properties, respectively, were not entitled to take advantage of the luxury decontrol
provisions of the Rent Stabilization Law, while simultaneously receiving tax incentive benefits under” New York City regulations, the court wrote. “We
agree.”

But at this point, it doesn't mattter. The property is worth $2 billion, and $3 billion is owed on it. This brick will make a huge splash in the commercial real estate pond. $600 million in reserves is practically gone. Steve Kurtz at Realpoint LLC says default is "practically inevitable." Ouch.