Hey, let's pay billions for real estate at the top of the market then have an idiotic business plan for making money
Tishman / BlackRock just pulled the plug on Stuyvesant Town, a huge residential project in Manhattan. They bought at the top of the market in 2005, paying $5.4 billion for it. It now may be worth as little as $1.8 billion, and they just turned it over to their creditors.
The California Public Employees’ Retirement System (CalPERS) lost $500 million of their retiree’s pension money as their equity investment in Stuyvesant Town is now worthless. Honestly folks, I think a chimpanzee throwing darts at stock listings could choose better than the arrogant, comatose money managers at CalPERS. They have a positive genius for buying at the top and then losing large amounts of money while somnolently intoning they are long-term investors and expect the market to come back.
As for Tishman / Blackrock, they bought the 11,227 apartment unit with aims of tarting it up then raising the rents – even though most of the units are strictly rent controlled. (What were they thinking?) A judge shot them down on the rent increases, then the real estate market tanked. Game over.
Gary Weisss sums it up: Death of the world’s dumbest real estate deal
But I bet lots of folks made huge amounts in commissions and fees on the deal. So maybe some of them weren’t so dumb after all.
