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.

1010 WINS’ Sonia Rincon Reports

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.)

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  • Scott C

    Making money is a fine and wonderful thing.
    Rent stabilization in a TARP’d-up, aka, “stabilized” or capital entitlement micro-communalist redistribution of wealth not based upon real production “market” is really not entirely indicate an objective real property market price of supply side/ earnings demand dynamic in the end.
    And particularly in a country which is currently at war, calling upon the line middle corps for defense.
    Note US regional jurisdictions into which capital has flown over the last few years, and very reasonable prices therein.
    Endless money taking from “up” in the hou$e in other US jurisdictions, certainly at this point in the cycle, is marginal return at best, unproductive, and long put gone.
    Those who view rent stabilized tenants in ST as “parasites,” clearly say such non-sense from not earned money fortune, but from extracted money privilege malperspective and misperception.
    Note 2006 T$ $5.4B deal, marginal return on capital, then collapse with possible money change walk away of $20,000,000.00 +.
    Then, with other similar, though not directly related market gross inefficiencies, the market collapse beginning in 09/2008: the market decided… then TARP’d itself up on the sovereign further from -$20,000,000,000,000 USD debt, 11/2008..
    Obviously credit markers must be maintained, particularly while at war.
    Reasonable to a degree, but not endle$$ly, especially in real property…food and shelter in the home camp while at war.
    Note recent hedge fund 2/3 discount purchase of PCV/ST Senior Debt.
    Regardless of consummation of final “deal,” who wins?
    Above analysis goes toward reasonable and proper expedition of capital, reasonably foreseeable with calculated high risk and without a crystal ball several years ago, particularly for those, with small stakes but with some degree of savvy, much of which was derived from personal and family heritage overseas and work in the field Stateside, managed to achieve some postive return,
    Helps to mitigate employment challenges, after all…
    The trend is your friend…
    With respect to capital, market, and real economy challenges, understood that the the way toward progress is rarely a smooth road…
    But there are limits.

  • Rob Bruggemann

    DanTe – How can you call it theft when thats what society told them was the deal? They fought in WW II, worked their entire lives being told that Social Security would be all the retirement they would need. They retire and suddenly the government can’t keep up its end of the bargain. Real Estate prices spiral up beyond what anyone would have ever dreamed back in 1945, and this is the retiree’s fault how? Think about it from their perspective, fixed income, no way to get more cash, no where else to go except an old folks home (which is not the ideal place for most). All they want is to live in their apts, until they die and pay what they can afford, is that so wrong? Its the deal society offered them and one they expect society to keep. In hindsight, yes they should have saved more and not made bad investments and perhaps have retired somewhere cheaper, but who the heck are we to tell these folks they are wrong, thieves or any other disparaging thing? These people could have been your grandparents, or mine, so quit being so darn snarky, stuck up and jealous.

    • Scott C

      Re Rob B’s comment:
      Good and objective analysis.
      Particularly given current market and real economy reality and the fact that stable society with some security in food and shelter takes at least some precedence over real property market challenges, particularly in a country currently at war.
      With respect to younger residents and higher rents, there is no doubt that uneven payments for shelter expense are vexing.
      Nevertheless, time is money; money is time.
      Longer lifespan actuarial quantitive realities tend to mitigate some of those challenges with, among other things, forward earnings growth return potential over time: dy/dx.
      And the wisdom of elders, particularly in these challenging daze, is a valuable dynamic and contribution.
      Hence, some reasonable argument toward discounting age related shelter expense, though generally applied and not specific to local application, toward more productive return on capital, national, and international security.
      Perhaps, “Easier ‘done’ than said,” [sarcasm] when not holding the ball [obviously this replier/commenter], but then who was at the helm in the first place?

    • DanTe

      You’re trying to claim that those folks living there are mostly or all WWII vets????

      Here’s a hint: If you have to LIE to make your point, you have NO point.

  • LadyofGpd

    Its a shame that people see low rent as people “getting over” Rents are getting dangerously high because real estate is capitalist. Everyone, the good, the bad, the rich and the poor need housing. Its getting to the point where only the very rich will be able to afford to live in New York. I’ve lived in my apartment for 15 years and if it were not rent stabalized, I would have had to leave and as it is, I am not sure I will be able to stay another 15 years so what happens to me? Does anyone care? No because they’re too busy gouging everyone for rent and the minute you lose your job and can’t keep up, you’re out on the streets. Housing should be socialized because everyone, no matter what their economic status, must have a roof over their head, not just the rich.

    • DAL

      you are crazy to think that being a landlord should be any different than anything else. You do understand that being a landlord pays for someone’s lifestyle the same way your job pays for your lifestyle and someone deciding they don’t feel like or cant pay the rent today affects that lifestyle the same way it would affect you if your boss were to decide they couldn’t pay your salary today. The fact that people think they are entitled to pay whatever they feel or that an apartment they rent is “theirs” somehow has become a problem in this city. People expect that because they live there even if it is a rental they somehow have the right to stay no matter what even if they can no longer afford it. Rent is a market rate good the same as food and the same as gasoline, if its acceptable for someone who cant afford gas to downgrade or get rid of a car it should be equally acceptable for someone to move out of NYC instead of thinking it was their right to stay regardless.

  • DanTe

    HA! Parasites paying for something?! Dream on.

    As long as they keep getting something for free, they’ll keep on sucking off of the system. And $450 per month rent in Manhattan is a STEAL – literally, a Theft sanctioned by the government.

    • John

      Add Congressman Rangel to the list of parasites – controlling four rent controlled apartments, and insisting he is doing nothing wrong.

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