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THE BLACKSTONE GROUP INC.

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Blackstone : StuyTown Owners, Tenants Clash Over Rent Law

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03/13/2020 | 01:48am EDT

By Will Parker

New York state's new rent regulation law is reopening a rift between some tenants at New York City's largest rental complex and its majority owner, the giant real estate investor Blackstone Group Inc.

At issue is whether the new law should apply to thousands of the highest-paying renters at Stuyvesant Town and Peter Cooper Village, which has more than 11,000 apartments overall on Manhattan's East Side.

The tenants association said that the new rent law means their annual increases should remain much lower than what Blackstone would otherwise charge them, according to a lawsuit filed in a Manhattan state Supreme Court last week.

Blackstone said the tenants bringing the suit represent the wealthiest tenants at the complex who already acknowledged their units would be deregulated in a previous court settlement.

After Blackstone and a partner bought the complex in 2015, the new owners reached a deal with the city to keep rents limited at 5,000 of the apartments for the next 20 years and set some guidelines for how the other apartments would be treated, in addition to adhering to other rules from a previous court settlement.

"The litigation filed on behalf of the complex's highest-income tenants seeks to invalidate a court-ordered agreement, and indefinitely extend rent control for residents paying over $4,000 a month," said Jennifer Friedman, a Blackstone spokesperson.

Blackstone estimates the tenants affected by the lawsuit have incomes of $262,000 a year on average. Under the previous rent laws, tenants making more than $200,000 a year for two consecutive years could have their apartments deregulated, but that measure was removed by the state Legislature last year.

The Stuyvesant Town litigation could potentially affect some 6,000 apartments at Stuyvesant Town not covered by Blackstone's affordability deal with the city, as well as thousands of other apartments citywide that are rent-stabilized under a city property tax credit called J-51.

More than half of Stuyvesant Town is covered by this tax credit. It requires rent stabilization of these apartments until June, when tax benefit expires, according to a landmark 2012 court settlement with the tenants. But the tenants suing Blackstone say the new rent laws passed last year no longer allow these units to be deregulated, even once the J-51 credit expires.

Ms. Friedman said Blackstone wouldn't increase rents more than what is allowed by the city's rent stabilization law until the court decided the case, and that its affordability agreement for other apartments would stay effective. "Our commitment to preserve 5,000 units of affordable housing stands," she said.

The new lawsuit at Stuyvesant Town is the latest sign that New York's new rent laws are changing the balance of power between landlords and tenants. The real estate industry, once known for its strong lobbying and political clout in New York's state and city government, has more to lose this year, as the New York state Senate's Judiciary Committee considers a bill that would bring rent control to nearly every apartment unit in the entire state.

Tim Collins, the attorney representing the tenants, said rent stabilization laws exist to protect all tenants, not just low-income ones, from price gouging, as well as to prevent landlords from taking advantage of New York's housing shortage.

"The owners are upset about having their investment-backed expectations disrupted," said Mr. Collins. "The law does not perfectly protect investment-backed expectations."

Former City Councilman Dan Garodnick, the current president of the Riverside Park Conservancy and a lifelong Stuyvesant Town resident, helped negotiate Blackstone's deal with the city in 2015. He said that the fight over the maximum-allowed annual rent increase can mean the difference between a family that can keep their home and family that has to leave.

"This is the middle class of New York. They are not the poorest and they are not the richest, and that does not mean that they do not struggle," he said.

Write to Will Parker at will.parker@wsj.com

 

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Financials (USD)
Sales 2020 4 791 M - -
Net income 2020 2 542 M - -
Net Debt 2020 4 601 M - -
P/E ratio 2020 28,1x
Yield 2020 3,02%
Capitalization 39 284 M 39 284 M -
EV / Sales 2019
EV / Sales 2020 9,16x
Nbr of Employees 2 905
Free-Float 98,3%
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