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.

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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.