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Sty Town is getting sold!
I'm surprised how little press this has gotten:
http://www.nytimes.com/2006/08/30/n...&pagewanted=all
110-Building Site in N.Y. Is Put Up for Sale
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By CHARLES V. BAGLI and JANNY SCOTT
Published: August 30, 2006
Metropolitan Life is putting Stuyvesant Town and Peter Cooper Village — a stretch of 110 apartment buildings along the East River — on the auction block.
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The sale of Stuyvesant Town and Peter Cooper Village, shown in 1947, would transform a complex built for World War II veterans.
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Graphic: The Big Deal
Graphic: The Big Deal
With a target price of nearly $5 billion, the sale would be the biggest deal for a single American property in modern times. It would undoubtedly transform what has been an affordable, leafy redoubt for generations of Manhattan’s middle class: teachers and nurses, firefighters and police officers, office clerks and construction workers.
MetLife, one of the largest life insurers in North America, said in July that it might sell the two complexes, which it built nearly 60 years ago with government help. It has hired a broker, who started registering bidders last week for the 80-acre property along First Avenue between 14th and 23rd Streets.
Behind the scenes, the sale has already drawn interest from dozens of prospective buyers, including New York’s top real estate families, pension funds, international investment banks and investors from Dubai, according to real estate executives, even though the marketing book will not be released to bidders until next week.
The deal is likely to lead to profound changes for many of the 25,000 residents of the two complexes, where two-thirds of the apartments have regulated rents at roughly half the market rate. Any new owner paying the equivalent of $450,000 per apartment is going to be eager to create a money-making luxury enclave, real estate executives say.
The sale would only add to the seismic cultural shifts already under way in New York City and especially in Manhattan, where soaring housing costs have made the borough increasingly inhospitable to working-class and middle-class residents. It would be another challenge to Mayor Michael R. Bloomberg’s effort to stabilize and expand the number of affordable apartments in the city.
“It’s really sad,” said Suzanne Wasserman, a historian and filmmaker who has lived in Stuyvesant Town since 1989. “New York has always attracted people who aren’t just interested in money — people interested in culture and poetry and music and dance and those young people who are the creative capital of the city. They aren’t going to have a place here and probably really don’t already. I think it affects everything about city life.”
Rumors of an impending sale began circulating among residents several years ago when MetLife was in the midst of $300 million in upgrades that included new landscaping and playgrounds, spruced-up fountains, new wiring, air conditioning, carpeting and lights. Rose Associates took over management three years ago.
At the same time, MetLife sought to oust tenants not listed on leases. And as rents for more apartments hit the legal threshold of $2,000 a month, MetLife has been able to charge new tenants market rates for those apartments when they became vacant. Under that threshold, the rent stabilization law limits increases to a fixed percentage each year for about a million apartments. About 27 percent of the tenants at Peter Cooper and Stuyvesant Town are now exempt from it and pay market rents.
But most, like Marilyn Phillips, 52, a nurse who has lived in Stuyvesant Town for 14 years, pay stabilized rents. She and her husband, a social worker, pay $1,700 a month for a two-bedroom apartment. News of the sale worried her. “It may mean we may no longer be able to live here,” she said. “The management is intent on making this luxury apartments and driving the working class out.”
MetLife and real estate investors view the sale far differently.
“It’ll be the largest sale of a single property in U.S. history,” said Dan Fasulo of Real Capital Analytics, a real estate research and consulting firm. “No doubt in my mind. It’s truly an unprecedented offering and an irreplaceable property. It would be impossible today to get a property of that scale in an urban location. And that neighborhood has become so desirable.”
Stuyvesant Town and Peter Cooper Village together are nearly as large as the biggest single residential development in the country: Co-op City in the Bronx, which has 15,372 units in 35 towers and 236 two-family houses. The MetLife land itself is about one-tenth the size of Central Park.
To market the properties, MetLife has hired Darcy Stacom, a broker at CB Richard Ellis. According to real estate executives, the company began registering potential bidders last week, telling them that MetLife hoped to select a winner by November.
The company reserves the right not to sell if the offers fall short, but Robert Merck, who oversees real estate investments for MetLife, said, “We think the current market conditions are very favorable.”
Already there are signs that bidding will be feverish. As one executive involved in the sale put it, “This is the ego dream of the world: 80 acres, 110 buildings, 11,000 apartments, covering 10 city blocks in Manhattan.”
According to several bidders, the list of buyers who have signed up includes the most active developer in New York City, the Related Companies; one of the largest landlords, Glenwood Management; Tishman Speyer, which controls Rockefeller Center; two publicly traded real estate companies, Archstone and Vornado; the international bank UBS; and the Blackstone investment firm, as well as the Rudin, Durst and LeFrak real estate families.
Given the size of the deal, buyers are expected to team up. ”You’ll see some interesting people stepping up to the plate for this one,” said William Rudin, whose family owns about 2,000 apartments in New York.
This is the latest big transaction for MetLife. Last year the insurer sold its landmark tower at 1 Madison Avenue and the skyscraper at 200 Park Avenue, the former Pan Am building, for more than $2.6 billion. But it is not getting out of the real estate business. It has a $40 billion portfolio of properties around the globe. But its presence in New York City is far smaller today than when its headquarters, with its signature clock tower, lorded over Madison Avenue.
The company played a major civic role in the last century, building and running vast housing complexes like Parkchester in the Bronx and Riverton in Harlem, as well as Peter Cooper and Stuyvesant Town. Parkchester and Riverton were sold long ago.
At the urging of the public works czar Robert Moses, MetLife built Stuyvesant Town and its slightly more affluent sister, Peter Cooper Village, in 1947, as housing for returning veterans where the city’s Gashouse District once stood. The company excluded blacks and unmarried people at first, until protests and lawsuits in the 1950’s and 60’s forced it to drop the barriers.
The city acquired some of the land for the project through eminent domain and gave MetLife all the streets in the 18-block area. The city also froze property taxes for 25 years at the value of the land before redevelopment, according to Samuel Zipp, a historian who wrote his Ph.D. dissertation on urban renewal in New York City.
Mr. Zipp, a visiting assistant professor of history at the University of California at Irvine, said that Stuyvesant Town and Peter Cooper Village served as a kind of urban Levittown, an early model for a new sort of city landscape that inspired later efforts in the 1950’s and 1960’s aimed at keeping city life affordable to the middle class. Among them was Lefrak City, a complex of 20 18-story buildings on 40 acres in Corona, Queens.
Stuyvesant Town and Peter Cooper are already undergoing great changes. Older residents are dying off. Young well-heeled professionals are willing to pay the higher rents. There are students from New York University — here one year, gone the next. There are fewer families and more single people, some of them subdividing one-bedroom apartments with partitions. A seven-story banner hanging down the side of a building on 14th Street announces, “Luxury rentals.”
Old traditions are also disappearing. The corny Christmas music and antiquated ornaments are gone, said Ms. Wasserman, the filmmaker who moved into Stuyvesant Town with her husband and son. Gone, too, is what she used to call the “friendly fascism” of the place: rules against playing on the grass, against sunbathing, against eating in the playgrounds, against running through sprinklers without shoes.
“It’s becoming two different communities here — those that have the rent stabilization and those that don’t,” said David Weiss, a 34-year-old writer who lives in a rent-stabilized one-bedroom apartment with his wife and young son. The turnover among new arrivals is so high, he said, “My wife and I kind of joke that when we make friends with people we’ll ask if they’re in a rent-stabilized apartment.”
Still, about 8,000 apartments remain under the city’s rent stabilization system. Even three-bedroom apartments remain in the hands of longtime residents still paying well under $2,000 a month.
Investors will want a return. “They have to raise the rents or convert it to a condo,” said Leonard Grunstein, a lawyer who specializes in deals involving multifamily affordable housing. “Either event removes this as affordable housing stock. If this were removed, there are probably 22,000 workers who live there, most are two-family incomes, probably 15,000 employees are there. Where are they going to go?”
Real estate executives are already poring over demographic information about the current tenants and considering long-term strategies, such as turning Peter Cooper Village into a condominium complex. That development sits on a rectangular piece of land bisected by a private road and the 3,000 apartments there tend to be larger, with more than one bathroom.
In interviews yesterday, some older tenants living in rent-stabilized apartments said they were not worried about being priced out of their homes right away. “I’m not really that concerned about it,” said Elliott Landen, 77, who said he pays slightly over $1,000 a month for a one-bedroom apartment. “I don’t think they’ll throw me out.”
But many said the people who will suffer most will be younger tenants holding out hope of raising children in Manhattan. One man, a 42-year-old computer programmer, said he and his wife had given up their rent stabilized one-bedroom unit in Stuyvesant Town when their daughter was born and had moved into a market-rate two-bedroom. He said he figured that in about two years his family would “wind up in the suburbs.”
“We’re at about $1,400 now,” said a woman named Evelyn, who declined to give her last name but described herself as a 77-year-old retired teacher who has lived with her husband in a three-bedroom apartment in Stuyvesant Town for 43 years. “If we die, whoever comes in will pay $3,500 or $4,000. This used to be a nice middle-income place. It’s no longer that.”
Anthony Ramirez contributed reporting for this article.
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