The Church of England has lost £40m from a disastrous investment in a buyout of two vast Manhattan housing complexes, Stuyvesant Town and Peter Cooper Village, that collapsed into default after struggling under huge debts incurred at the peak of the US property bubble.
Home to 25,000 people, the two redbrick housing estates comprise 56 buildings along New York's East River. Completed shortly after the second world war, they are known as one of the few remaining bastions of affordable living among the multimillion-dollar tower blocks of lower Manhattan.
They were bought for $5.4bn (£2.86bn then) in 2006 by a consortium led by a New York investment firm, Tishman Speyer, and the fund management group BlackRock, in the biggest US residential property deal on record. But after struggling for months to keep up repayments on loans attached to the buyout, Tishman today handed over the entire estates to its creditors, making the deal a landmark victim of the plunge in property values.
Financial backers of the deal will see their investments largely wiped out. The church commissioners put up for a 4% stake in Stuyvesant Town in June 2007.
Residents of the 11,000 flats in Stuyvesant Town were staunchly opposed to the Tishman buyout, which was highly leveraged by debt and predicated, in part, on cutting the number of tenants paying below-market rates under "rent controlled" deals. Over the past three years, Tishman has become deeply embroiled in litigation to get veteran residents to pay more rent .
COMMENT: So, not only are the, already meagre, pensions of Church of England priests under further threat (this coming on top of a recent loss of £1.3 billion sustained by the Commissioners) but we have to live with the shame inducing fact that this was because our church invested in company intent on making money by hiking rents and forcing people out of their homes. I wonder if the Church Commissioners will see a decrease in their pensions and wages because of this dodgy deal.
Actually, no I don't.
Big thanks to Cathy for sending this story in to MadPriest Towers.