Settlement clears way for sale of NYC megacomplex Stuyvesant Town

A settlement over rental rates at Stuyvesant Town-Peter Cooper Village removes a major hurdle to a sale of Manhattan's largest apartment complex, almost three years after the property's previous owners ceded it to lenders.

"The importance of this evening's announcement should not be diminished," Harris Trifon, a credit analyst with Deutsche Bank in New York, wrote in a note after the law firm for the plaintiffs announced the deal on Monday.

"It has removed the last significant obstacle which needed to be cleared before a sale could take place."

The ownership of the 32-hectare complex has been in limbo since early 2010, when Tishman Speyer Properties and BlackRock Realty defaulted on their debt, in part because a legal challenge from tenants prevented them from raising rents as much as they anticipated. By removing the overhang of litigation, future cash flow can be more easily determined to establish a value for the property.

The settlement calls for CWCapital Asset Management, which controls the entity that now owns Stuyvesant Town, to set aside US$68.75 million to reimburse tenants and former tenants at the rent-stabilised property who had been overcharged since 2003.

MetLife, which sold the complex to Tishman Speyer and BlackRock in 2006, will contribute US$10.5 million of that sum.