Hindsight check: March 2007 evidence versus later official statements

Stuyvesant Town and Peter Cooper Village: what the numbers showed in March 2007, and what later sources actually establish

Historical education only, not investment or legal advice. The left column uses only sources available on . The right column adds a later court opinion and a later state statement. Anything no source states is marked UNKNOWN.

Dated timeline

  1. filed Senior mortgage originated: $3,000,000,000 at 6.4340%, interest-only for 120 months. ST1 prospectus
  2. announced Acquisition announced at $5.4 billion. ST2 announcement
  3. reader stands here Prospectus filed with 2004 to 2006 NOI and a 2011 underwriting forecast. ST1 prospectus
  4. legal ruling Court of Appeals rules luxury decontrol unavailable while J-51 benefits were received; retroactivity left open. ST3 court opinion
  5. observed event State Senate statement says the owners would miss a payment that day on the purchase debt. ST4 Senate statement
  6. forecast horizon Filed target date for 6,397 deregulated units and 2011 cash flows. No source here reports what was realized. ST1 prospectus

Pre-outcome column, sources dated up to

March 2007 What a reader could calculate

1. Coupon coverage on filed 2006 income

  • Whole senior mortgage ST1 prospectus$3,000,000,000
  • times filed coupon ST1 prospectus6.4340%
  • equals senior annual interest$193,020,000
  • 2006 NOI, filed ST1 prospectus$112,242,474
  • Operating shortfall to interest$80,777,526
  • 2006 coverage, NOI / interest0.58x

Earlier filed years were lower still: 0.48x in 2004 and 0.51x in 2005. This is senior coupon only; the separate $1,400,000,000 mezzanine layer is not in the ratio. ST1 prospectus

2. Filed future-NOI growth hurdle

  • Underwritten NOI, 2011 cash flows forecast ST1 prospectus$336,156,380
  • Filed Underwritten DSCR ST1 prospectus1.71x
  • Simple coupon proxy coverage1.74x
  • NOI growth needed, 2006 to 2011199.49%
  • Per year over 5 years, compounded24.53%

For contrast, filed NOI grew 7.34% in 2005 and 13.53% in 2006. Just reaching 1.00x on the senior coupon needed 71.97% total growth, or 11.45% per year. ST1 prospectus

2006 NOI, observed$112,242,474
Senior annual interest$193,020,000
2011 underwritten NOI, forecast$336,156,380
Bar lengths are each amount divided by underwritten NOI. Striped bar is a filed forecast, not an observation. ST1 prospectus

3. What the forecast rested on

Footnote (2) ties underwritten NOI and DSCR to converting rent-stabilized units, reaching 6,397 deregulated units of 11,227 by , and states that a lower conversion rate would negatively affect underwritten coverage. ST1 prospectus

Senior mortgage plus mezzanine equals 81.48% of the $5,400,000,000 price, and 2006 NOI was 2.08% of price. ST1 prospectus ST2 announcement

Not knowable from these sources: whether the projected conversions would happen, at what pace, and how any later dispute over them would be resolved. The filing treats conversion as a forecast assumption.

Outcome column, sources dated and

2009 to 2010 What later official sources establish

Legal ruling,

The Court of Appeals agreed with tenants that luxury decontrol could not be used while J-51 tax benefits were received, and affirmed the Appellate Division. ST3 court opinion

The majority explains that DHCR had taken a different position before judgment. The legal position before 2009 was contested, not a predictable adjudication. Retroactivity and tenant-specific defenses were expressly left unresolved.

It is a ruling on law: it counts no units and states no income, debt service or cash figure.

Observed missed payment,

A New York State Senate statement says the owners would miss a payment that day on debt from their 2006 purchase, and calls for upkeep and tenant protections amid the default. ST4 Senate statement

A missed mortgage payment is an observed event, not proof that any particular projection error alone caused it.

Ruling versus payment. The first is a legal decision about whether decontrol was allowed; the second is an observed missed payment. Neither one by itself measures the other.

Neither ST3 court opinion nor ST4 Senate statement by itself supplies the realized 2011 NOI, a 2010 refinance offer, all-in debt service, or owner cash. Each stays UNKNOWN.

Side by side

QuestionMarch 2007 calculationLater sources, 2009 to 2010
Did filed income cover the senior coupon? 0.58x on 2006 NOI. ST1 prospectus No later income figure. 2011 NOI stays UNKNOWN.
How much growth did the filed ratio need? 199.49% total, 24.53% per year. ST1 prospectus Not measured. The ruling limits a decontrol route but quantifies nothing. ST3 court opinion
Legal footing for conversions A forecast assumption; filing warns lower conversion hurts coverage. ST1 prospectus Ruled on after a contested history; retroactivity open. ST3 court opinion
Payment performance Interest-only loan, 120 months; no payment history in the filing. ST1 prospectus Missed payment stated for . ST4 Senate statement
Refinance offer, all-in debt service, owner cash UNKNOWN Still UNKNOWN.

Explicit unknowns