The First Domino in New Crisis?

The purchase of the huge Manhattan apartment complex known as Peter Cooper Village and Stuyvesant Town by Tishman Speyer and BlackRock for $5.6 billion was a big deal when it went down in 2006. That was before the financial crisis. Now, the apartment complex is almost out of cash. The property is estimated to be worth only $2.1 billion now, and it could be in default by the end of the year. Many think that its failure would, according to The Wall Street Journal, signal “the beginning of what is expected to be a wave of commercial-property failures.” Its failure would rattle the market for other commercial properties like apartment buildings and hotels and would perhaps usher in a crisis for commercial mortgage-backed securities.