Tishman Speyer Properties bought Stuyvesant Town and Peter Cooper Village in one of the biggest real-estate deals of all time in 2006 when it paid $5.4 billion for the sprawling complexes along the East River north of 14th Street.
But even as Tishman Speyer ousted what it described as illegal tenants of rent-regulated apartments and brought hundreds of those units to market rates, its revenues from the 110 red-brick buildings at the two complexes dropped last year, a new analysis of financial documents shows.
According to the analysis, by the business newsletter Commercial Mortgage Alert, Tishman Speyer converted 560 apartments in 2007 and expected to convert 670 this year. But its net income fell to $108.3 million last year from $113.1 million in 2006, the analysis found.
The report said that the legal costs associated with removing tenants contributed to the company’s lost revenues. But the real estate market has also softened. Late last year, tenants and real estate executives said there were as many as 700 vacant units at the complexes, though Tishman Speyer said on Tuesday that the number had dropped to 200.
At a rally at the complexes on Tuesday, City Councilman Daniel R. Garodnick said that many legitimate longtime residents have had to hire lawyers to defend themselves against “baseless” legal actions brought by Tishman Speyer. He called for a moratorium on the company’s nearly two-year campaign “to move rent-stabilized apartments to the market rate.”
“The calls are flooding into our offices,” said Mr. Garodnick, who represents the district and who lives in an unregulated apartment in Peter Cooper Village. “Many legitimate tenants are being pursued by their new landlord.”
Tishman Speyer said that it was merely trying to clear out tenants who were abusing the system. The company has refused to renew 870 of 6,679 rent-stabilized leases since December 2006, claiming that the tenants had primary residences elsewhere or were illegally subletting apartments.
In a statement released Tuesday, the company said that 87 percent of the rent-stabilized tenants have had their leases renewed without question. Among those not renewed, the company said, were a television anchor in Kalamazoo, Mich., and a full-time resident of the Upper East Side who was renting out an Stuyvesant Town apartment for a profit.
But Mr. Garodnick and State Senator Thomas K. Duane, who also was at the rally, said that many legal residents who had been swept up in the company’s dragnet had spent anxious months trying to disprove the charges. Tishman Speyer said that it had won roughly half of the cases it brought, while tenants in the other half were found to have a legal right to renew.
Amy Lamy, a legal secretary and a 10-year resident of Stuyvesant Town, got a notice in December that her lease would not be renewed. She said the landlord claimed that she lived in a 400-square-foot apartment in Brooklyn that she had bought for her mother and in a Manhattan apartment in which she had not lived for 15 years.
She spent four months working with a lawyer and assembling bank and credit-card records that proved she lived in Stuyvesant Town before Tishman Speyer relented and renewed her lease.
“It was nerve-racking,” Ms. Lamy said. “These were intimidation tactics.”
Mr. Garodnick said that although it is not legally required to do so, Tishman Speyer should reimburse tenants who were pursued in error. He offered five other “ground rules,” including a moratorium on legal notices until December.
Tishman Speyer and its partner, BlackRock, a private equity firm, won a fierce bidding battle for the 11,232 apartments at the height of the real-estate market, when many companies were buying property based on projected income, not on existing rent payments. But after the company paid $5.4 billion, real-estate analysts estimated that it would be six to eight years before the complexes would break even.
Tishman Speyer expected that it could renovate vacant, rent-regulated apartments and ultimately obtain market rents. At the time of the sale, more than 70 percent of the apartments at the two complexes were regulated.
Tishman Speyer has offered all sorts of enticements to attract market-rate tenants, including a rent-free month and welcoming pets for a one-time fee of $250. The free-rent promotion ended in April, although the company continues to pay brokers’ fees.
The company also installed pressurized walls in some apartments to convert living rooms into extra bedrooms so that the rent could be split among more tenants. But the city recently put an end to that practice, citing potential fire hazards. The company said it was working with city officials on the matter.