September 23, 2006
Complexes’ Seller Pushes Profits, as Critics Fear Higher Rents
By JANNY SCOTT
Wondering how long it might take a new owner of Stuyvesant Town and Peter Cooper Village to remove most of the apartments from rent regulation? The seller has a prediction: By 2018, the percentage of stabilized apartments in the complexes could plummet to less than 30 percent from more than 70 percent today.
MetLife’s brokerage company, which prepared the document, has some tips, too, for potential buyers hoping to appeal to what it calls “the discerning tastes of Manhattan’s market-rate apartment community.” It suggests turning the complexes into gated communities, adding “health club amenities,” selling units, importing doormen and installing “an elite private school.”
The 117-page offering memorandum may paint an overly rosy picture of a new owner’s possible profits in hopes of enticing bidders for what could be a $5 billion sale, but it also suggests strongly that the community’s days as an unpretentious middle-class bastion in increasingly upscale Manhattan may well be numbered.
With “aggressive investigation of potential stabilization violations,” the memo suggests, a new owner could deregulate 1,000 units in both complexes in 2008 alone, “approximately double the current rate.” By investing in major capital improvements, a new owner could speed up rent deregulation and win additional rent increases, even in the rent-stabilized apartments.