Terrible Idea: Trump Eyes Stuy Town
The real estate mogul, known for his glitzy towers, is mulling a bid for Stuyvesant Town and Peter Cooper Village, the sprawling New York City apartment complexes that were seized by creditors last week.
"People have asked us if we would get involved in running it or buying it," Trump told the New York Post. "We are looking at it right now very seriously."
The prior owners, led by Tishman Speyer, had paid $5.4 billion to buy the 11,000-unit complex - that's about half a million per apartment. But their plan to hike up the rents was killed by New York's tough rent stabilization laws.
What is the Donald thinking?
The Trump portfolio doesn't include any rent regulated buildings. His apartment and condo buildings in New York are concentrated along Park Avenue and Central Park South and promise a certain "Trump" quality of life.
Just check out the Trump website. "The grand entrance of exquisite marble invites residents to leave an ordinary lifestyle behind," the site gushes. "Trump Parc exemplifies all the grandeur, elegance and lifestyle synonymous with Trump."
The somewhat proletarian, red brick design of Stuy Town would seem out of place among the grandiose towers of Trumpland -- to say nothing of Stuy Town's residents! The complex was built to provide housing to normal, working people -- veterans, cops, teachers. And, thanks to New York's tough rent regulation laws, thousands of working folk earning less than "luxury apartment" wages still live there.
Trump's got some competition. Others that have expressed an interest in owning or managing Stuy Town include WinnCompanies and the Related Companies, both of which have loads of experience with affordable housing. There's also the LeFrak Organization, one of the largest owners of rent-stabilized apartments in the city.
These companies might at least have a chance at navigating the complicated rent regulations that drove Stuy Town's former owners into foreclosure. How thorny are the regulations? Tishman Speyer worked feverishly from the moment they bought Stuyvesant Town in 2005 to raise the rents on as many apartment as they could. They had billions on the line -- and they failed.
But maybe Trump is more patient than we think. Maybe he has a very, very long term plan. If the Donald can buy the complex at a low price that can be supported by the current low rents, and clear up the legal problems surrounding Stuy Town's property tax abatement (a big if), then maybe he could afford the painstaking process of taking apartments back out of the rent stabilization program one by one. Of course, for each apartment, he'd have to wait until the rent has reached $2,000 a month and the tenant had voluntarily moved out before putting the apartment through "luxury decontrol." And as anyone who's ever lived in a rent stabilized apartment knows, people don't give them up easily.
Just think: Within a decade, Trump might be able to charge whatever rent he wants for... several apartments.
In 50 years, it might even make sense to redo the lobbies in marble.