Tishman-Speyers is walking away from the 56 residential buildings, 11,250 apartments, and over 25,000 residents that live in the properties it bought for $5.4 billion in 2006. Yes, they are walking away as in handing the keys to whomever and bidding adieu.

Strategic defaults are nothing new. Billionaires do it all the time. The issue here is that companies like Tishman-Speyer get to walk away from bad deals; whereas the regular family with a hefty mortgage and lost equity is made to believe they have a moral obligation to continue funding what is a bad financial proposition that no corporation would ever honor themselves. Which is why I absolutely agree with the tone of Michael Corkery's Tishman Speyer’s “Jingle Mail” on Stuyvesant Town outrage over at, of all places, the Wall Street Journal:

Where is the outrage?

[...]

Real-estate developer Tishman Speyer is handing control of the Manhattan apartment complex Stuyvesant Town and Peter Cooper Village to lenders that backed the $5.4 billion acquisition. With the massive property underwater and Tishman having put only $112 million of its own money into the deal, it makes more sense for the Speyers to walk away from the apartments.

Like residential home owners, Tishman Speyer Group calculated that it could take decades to regain the equity lost on its property.

Similarly, Tishman Speyer has calculated that complicated tenant laws in the New York could prevent the company from profiting on the development for many years. (The company’s strategy depended on being able to evict lower paying tenants and replace them with young professionals.)

Yet while residential homeowners are being attacked for not making good on their mortgages, Tishman Speyer has so far avoided such criticism.

As a Stuyvesant Town tenant I am not shocked with this bit of news. From years there had been rumors that Tishman-Speyers, which has helped New York University amass its real estate empire, was going to buy the place. Of course, the rumors started when MetLife entered into a housing agreement with the univeristy and literally slumlorded apartments into hipster fire hazards. Actually, it was thanks to New York University's business that MetLife and Tishman-Speyer got away with illegally vacating and renting at market prices rent-controlled apartments; especially in Stuyvesant Town (where we snarkily renamed the place NYU's dormtown)

Rent laws prevent Tishman-Speyer or any new owners to evict us, but it still feels surreally insecure to be in the middle of one of the biggest real estate failures in the history of the Unites States. Stuyvesant-Town & Peter Cooper were the third largest real estate sales in this country. It goes to show that when it comes to affordable housing for the grey collar working and middle classes of New York City, you cannot leave it to the vagaries of the mythical "free market". And this is why Tishman-Speyers epic failure is Michael Bloomberg's failure as well.

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