Crain’s is reporting that the largest real estate deal in American history is headed for an iceberg. Last month MetLife agreed to sell Stuyvesant Town and Peter Cooper Village to the highest bidder, Tishman Speyer, for $5.4 billion. It was supposed to close this week. The 110 building complex on First Ave. between 14th and 23rd Streets, was built by MetLife for returning veterans from World War II. Since then, generations of middle class and working people have lived and raised families there, as the rents are significantly below market rate as a result of stabilization laws.
Now Crain’s is reporting on a long-forgotten agreement dating back to 1942 between the City of New York and MetLife that the company would not make more than a 6 percent annual profit on the development in exchange for a 25 year tax break. Presumably this referred to the rent collected from tenants, but a lawyer representing the tenants, who only recently discovered this agreement, is making the argument that it applies to the sale of the property as well, and that all profits above 6 percent from the sale should go to the city. Needless to say, Tishman Speyer probably wouldn’t be down with that.
Is this a last minute “desperate” effort to derail the deal? Of course! Is it also a legitimate claim based on a binding legal agreement? Depends on the judge. And you can take it to the bank that a judge will be getting involved.