Church of England facing $70 million loss: CEN 10.23.09 p 5.

First published in The Church of England Newspaper. The Church of England appears set to take a $70 million loss in the US real estate market, losing its entire investment in New York City’s Stuyvesant Town/Peter Cooper Village apartment complex. On Oct 14 the Wall Street Journal reported the partnership venture led by Tishman Speyer Properties that purchased the 56-building, 11,000-unit residential complex in lower Manhattan was in danger of default. As of the end of September, the Journal reported, the partnership had $33.7 million left of $400 million in interest reserves to service its debt. With a ‘burn rate’ of $16 million per month, real estate analysts predict the project will be in default by year’s end.

At the height of the Manhattan property market, the Church Commissioners of the Church of England invested $70 million as equity partners in the project, alongside the California Public Employees Retirement System which invested $500 million, and the Florida State Board of Administration which committed $250 million to the deal.

Tishman Speyer Properties purchased the complex for $5.4 billion in 2006. The property is now thought to be worth $2.1 billion. Income from the property was projected to reach $336 million per year by 2011, but is currently bringing in only $139 million.

Tishman Speyer Properties did not respond to Religious Intelligence’s requests for comments, however a spokesman for the Church Commissioners said: “I can confirm that we are invested in this fund as part of a well diversified domestic and global indirect property portfolio. The Commissioners manage a long-term fund, so we will continue to work with our portfolio managers.”

Florida’s pension fund currently values its $250 million investment in the project at zero, however, the spokesman for the Church Commissioners told Religious Intelligence that for reasons of commercial confidentiality, it could not give a current valuation of its investment.

The sprawling collection of red brick apartment buildings, built immediately after the Second World War covers 80 acres of land on the East Side of Lower Manhattan, stretching from First Avenue to Avenue C, between14th and 23rd Streets. Current rents for the property range from $2850 for a one bedroom apartment to $7000 for a five bedroom apartment.

For 2008, the Church Commissioners reported a 22 per cent or £1.2 billion loss in asset value, due to the global financial collapse. In his Sept 16, 2009 report on the first two quarters of 2009, First Church Estates Commissioner Andreas Whittam Smith reported that equities rallied in the first two months of the second quarter as investors grew more confident, bringing major stock markets back to levels similar to those at the end of 2008.

The Commissioners’ UK equities “returned 12.2 per cent in the second quarter, ahead of the 10.9 per cent benchmark,” while the “picture with real estate was mixed.”

The UK commercial property markets “are arguably bottoming out following capital value falls of 44 per cent since the July 2007 peak,” Mr. Whittam Smith said. In the late 1980s and early 1990s speculation in London properties led to an £800m loss for the Church Commissioners.