Stuy Town Residents Could Get NYC Grail: Ownership
NEW YORK (AP/1010 WINS) — The things people do for a good Manhattan real estate deal.
For Ellen Cassels it’s living with her husband and two sons in a one-bedroom apartment. Every night, she and her husband climb into a custom-made Murphy bed in the living room, while their boys bunk in the master bedroom. For their sacrifice, they pay just under $1,500 a month. And she’s not going anywhere: She even hopes to buy the apartment one day.
The tenants at the 11,000-unit complex known as Stuyvesant Town and Peter Cooper Village — which was bought for $5.4 billion before collapsing to an estimated value of less than $2 billion — all want something different as they navigate out of what’s known as the largest failed residential real estate deal of all time.
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Elsewhere in the complex, Kei Kim pays $1,100 more a month for a similar apartment with his roommate, and has different goals.
“We just recently graduated, so we are thinking of paying our rent monthly rather than buying anyplace,” said Kim, who works at a small hedge fund.
Cassels, along with many tenants with rents kept low by the city’s rent-stabilization program, is hoping ongoing talks with the company that controls the property will lead to a chance at the elusive grail of middle-income Manhattan real estate: the opportunity to buy her apartment.
In order for any deal to work, a sizable number of tenants would likely have to agree to buy in, says Ben Thypin, a senior market analyst at the real estate research firm Real Capital Analytics.
But Kim and other young renters who see the quiet complex as a temporary stop are less enthused at the prospect, as are some of the complex’s senior citizens, many paying bargain-basement rents.
While rumors of a co-op conversion have come and gone for decades, this time the difficult financial position of the investors who funded the failed deal adds a whiff of reality.
The conversion is in the investors’ interests because “the tenants are in the position where they would probably value the property at the highest price,” Thypin said. Investors “might not lose as much as we thought they would a year ago — but they’re certainly not going to make the money back,” he said.
The talks between tenant representatives and CW Capital, the company representing the senior investors, are still at an early stage, says City Councilman Dan Garodnick, a longtime resident who represents the complex and says he’s been involved in the talks. Both sides are interested in developing an affordable option allowing tenants to buy in, he said.
CW Capital, which struck a deal with other investors last month that allowed it to take full control of the property while avoiding tens of millions of dollars in transfer taxes, did not return a call seeking comment.
Under any agreement, tenants would have the option of staying renters, Garodnick said.
That’s particularly important to the large numbers of residents who are past retirement. The complex was built by Metropolitan Life in the 1940s for returning World War II veterans, and over the years many residents who landed one of the good deals there have been loathe to leave.
“When you’re my age, it’s not as if I’m considering it as an investment” said 74-year-old Joseph Burke, who added he would have been far more interested in buying his place when he first moved in 34 years ago.
Still, he said, “it would be nice if I could pass it on to my son and daughter, because I like this community.”
Nearby, in the placid gardens shared by the residents and filled on the weekends with kids playing football and neighbors walking dogs, Irene Cangialosi is much more decisive when asked if she would want to buy.
“No way!” the 70-year-old says. After 20 years in her apartment and with her rent frozen through a program for senior citizens, ownership couldn’t possibly offer her a better deal than the one she has, she says.
At the other end of the spectrum are the students or recent college graduates who moved into the more expensive, market-rate apartments removed from rent stabilization. While these 4,400 units were moved back under the rent-stabilization umbrella by a recent tenant lawsuit, their residents are still paying as much as $4,000 a month per two-bedroom apartment, Garodnick says.
There are other considerations for younger residents who sometimes feel put off by the demographic divide on the property, which can feel a world apart from the trendy East Village bars and restaurants just a few blocks away.
“There are families, and then there are students, and then there are old people,” said Sam Ahn, who believes his youth has earned him a few nasty looks around the complex. “It’s a really different world than the rest of Manhattan. It’s sort of closed off like its own community. … Being young, I just want to experience something more dynamic.”
That quiet remove is part of what could make buying so appealing for residents raising kids. But it’s hard to say whether the tenants and owners will be able to agree on a deal that would make buying affordable. And it’s hard to say what qualifies as affordable in a borough where the median sale price for an apartment last quarter was $900,000, according to a report by The Corcoran Group.
Cassels, who calls herself middle class, says her apartment would need to be offered at $300,000 or less to be something her family would consider.
For a place where she can sit on a bench under a tree listening to the rush of a decorative fountain, her boys playing around her and a kids’ football game under way nearby — that would certainly seem to be less than she could expect to spend elsewhere in Manhattan.
But for those with stabilized rents, romantic notions of homeownership may not be enough to persuade them to buy at a price that would increase their monthly payments.
“The idea of calling something your own, having something you own,” is a powerful one, but “always seemed unlikely,” says Doug Wedeck, pushing his 10-month-old son’s stroller out by the fountain.
Ultimately, the 46-year-old says, “I just want a good deal.”
(Copyright 2010 by The Associated Press. All Rights Reserved.)