Clock Ticking For Manhattan Apartment Complex

My vote for most preposterous real estate transaction of the bubble, Tishman Speyer's $5.4 billion purchase of Stuyvesant Town in 2006, is two months away from defaulting on its massive debt load. The problem? When the deal was put together, lenders were projecting that the complex's net operating income would triple to $336 million in 2011 from $112 million in 2006. Since net income is projected to be around $139 million this year, it's a bit of an understatement to say that rents are lagging. Meanwhile, that nifty $400 million interest reserve that was supposed to service the debt while rents skyrocketed to the moon was down to its last $33.7 million at the end of September. With a $16 million monthly burn rate, I'll let you do the math. A special servicer is taking over the handling of the CMBS, which is very necessary considering what a debacle this default will become once the various lenders begin to argue over who gets what when so little is left. A recent valuation of $2.1 billion on the properties would wipe out all the equity, mezzanine and some of the senior debt. The geniuses at Tishman, who put this deal together, don't seem to have too much on the line financially, as they left the honor of holding the bag to the folks like the retirees of California (via Calpers' $500 million investment), the Florida State Board ($250 million), GIC (the people in Singapore who probably don't know their government invested over $575 million in a crappy NY real estate deal) and the God-fearing folks at the Church of England (only $70 million but locusts and general pestilence might ensue at Tishman's headquarters.) Fannie and Freddie own $1.5 billion in senior debt. But at least it's senior, so the US government should recover significantly more than the aforementioned losers in this giant turkey of an investment.