Blackstone Loses Rent Dispute at Manhattan’s Biggest Apartment Complex
Tenants living in Manhattan’s largest apartment complex, Stuyvesant Town-Peter Cooper Village, won a battle to keep their rents insulated from potentially sharp increases, after a judge ruled this week against their landlord, the Wall Street private equity firm Blackstone.
The company is the largest owner of commercial real estate in the world, and has lately been expanding into rental housing. Blackstone bought the apartment complex in 2015 for about $5.4 billion, in a deal that was praised by local politicians because of promises that nearly half the 11,200 units would remain affordable to middle-class families.
The legal dispute centered on whether other units at the complex, roughly 6,000, should also remain rent stabilized. Rents in such units can only go up by set amounts every year, and renters have a right to renew their leases.
The new ruling was the latest development in the turbulent history of the complex, a group of 110 plain red brick buildings built across 80 acres in the 1940s as middle-class homes that has since become an emblem of many of New York City’s most high-profile housing disputes.
It comes as the role of investors and private equity firms in housing, both in New York and nationwide, has drawn heightened scrutiny from housing activists and politicians amid soaring rents and dwindling affordability.
The apartments at issue in the case had been set to lose rent stabilization in July 2020. But citing new tenant-friendly laws passed by the state in 2019, a group of tenants and the Stuyvesant Town-Peter Cooper Village Tenant Association filed a lawsuit in March 2020, arguing that their homes should instead remain rent stabilized.
Blackstone argued that the provisions of a 2013 settlement stemming from a prior case should allow it to deregulate the apartments beginning in July 2020. It argued the state laws did not supersede that settlement. But in a ruling dated Jan. 4, Justice Robert R. Reed of New York State Supreme Court in Manhattan sided with the tenants.
Susan Steinberg, president of the tenants association, said on Friday that “thousands of our neighbors can plan on staying in their homes, protected by rent regulation.” She framed the dispute as a “David and Goliath” story.
“They are a huge corporation,” she said of Blackstone. “It seemed that every time I saw the news, they were buying yet some other group of homes.”
According to Blackstone, the average rent in the apartments affected by the ruling is about $4,200 a month, and the average income of the households is about $247,000, figures that Ms. Steinberg did not dispute.
A Blackstone spokeswoman did not say whether the firm planned to appeal, but said it had “invested more than $300 million into the property” and “materially improved service levels,” as well as kept 5,000 homes not impacted by the ruling restricted to lower-income tenants.
“Our commitment to residents is unchanged,” she said.
Stuyvesant Town-Peter Cooper Village was built soon after World War II for veterans, and for decades it was seen as a bastion for the middle class. In 2006, it was bought for a staggering $5.4 billion by Tishman Speyer Properties, which owns Rockefeller Center, and its partner BlackRock.
The new owners moved to evict hundreds of residents, renovate vacant apartments and raise rents. Tenants accused them of illegally removing apartments from rent regulation, leading to the 2013 settlement.
When Blackstone purchased the complex, in partnership with Ivanhoé Cambridge, it agreed to preserve 5,000 units at rents affordable to middle-class families. In exchange, the administration of Mayor Bill de Blasio waived $77 million in mortgage recording taxes and gave Blackstone a $144 million low-interest loan.
Today, roughly 27,500 people live in the complex.