Stuyvesant Town–Peter Cooper Village: America’s Largest Foreclosure Harvard Case Solution & Analysis


The founder of Pershing Square, William Ackman has been contemplating to invest in real estate.He has decided to explore the new opportunity and acquire Stuyvesant Town and Peter Cooper Village ("ST /PCV"). The owner of the property has abandoned itand it has now come under the CW capital control.

It might be a risky investment for the founder as he has to seek protection in the courts of bankruptcy. While the process of the bankruptcy might not be new for him, it would add some unknown outcomes and significantcomplexity. It is to evaluate that whether the investment would be beneficial or worthwhile for him, and give ambiguous valuation.

The valuation of the rental property for the year 2010 holding 10 year period would help in measuring and then protecting the risk.

Question No. 01

Two of the leading influential andinstitutional investors namely Tishman Speyer and Black Rock have pondered acquiring ST-PCV for 5.4 billion. They have mused to make investment in one of the largest American deals ever which would return back in bulk to them.

The decision was based on several factors such as the property is matchless and incomparable as it has unique and exceptional features, location as well as largesize. In addition to this, the rental revenues seem to be increasing because the rent stabilization apartments were converted into market rate, which has increased the revenue generated from rental property.

When they decided to buyout or acquire a controlling interest, the rent stabilized units were frequently higher i.e. 72% of units which means that they could have earned more from the increased annual rent rates. Furthermore, perhaps they could determine and set future rents on the lease.

Stuyvesant Town–Peter Cooper Village America’s Largest Foreclosure Harvard Case Solution & Analysis

In addition, the dynamic community planning or capital improvement program (CIP) might be used to coordinate the timing, location and capital financing improvement over the multi-year time period.They have decided to initiate the marketing campaign and value enhancement capital plan.This in turn can create significant long term benefits for them. They both have agreed on investing $125 million in the value enhancement capital plan and new marketing campaign in order to get the utmost financial benefits.

The campaign being initiated has resulted in a number ofbenefits provided to the tenants of the rental property. The providedfacilities would be enough to generate profit or rental income.

Also, the government responsibility and initiative about fiscal management tool and dynamic community development would help in coordinating the timing, location and capital improvement financing over the multiple period of time. The government has invested $210 million in the capital improvement program between 2002 and 2006.

Question No. 02

Numerous mistakes made by Tishman Speyer and Black Rock have posed a significant problem to them. Firstly, they did not address the concern of the different tenants on refurbishment and gentrification of the rentalproperty. They could have recorded the preferences of different tenants and act accordingly.Anlso, the decision should be made based on the concern and preference of the mainstream.

The sponsor of the project was accountable for attracting the number of residents, but he failed to catch greater number of residents after the significantrisein the rental rates....................

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Stuyvesant Town–Peter Cooper Village: America’s Largest Foreclosure

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