The Church of England has lost £40m from a disastrous investment in a buyout of two vast Manhattan housing complexes, Stuyvesant Town and Peter Cooper Village, that collapsed into default after struggling under huge debts incurred at the peak of the US property bubble.

Home to 25,000 people, the two redbrick housing estates comprise 56 buildings along New York's East River. Completed shortly after the second world war, they are known as one of the few remaining bastions of affordable living among the multimillion-dollar tower blocks of lower Manhattan.

They were bought for $5.4bn (£2.86bn then) in 2006 by a consortium led by a New York investment firm, Tishman Speyer, and the fund management group BlackRock, in the biggest US residential property deal on record. But after struggling for months to keep up repayments on loans attached to the buyout, Tishman today handed over the entire estates to its creditors, making the deal a landmark victim of the plunge in property values.

Financial backers of the deal will see their investments largely wiped out. The church commissioners put up for a 4% stake in Stuyvesant Town in June 2007.

Residents of the 11,000 flats in Stuyvesant Town were staunchly opposed to the Tishman buyout, which was highly leveraged by debt and predicated, in part, on cutting the number of tenants paying below-market rates under "rent controlled" deals. Over the past three years, Tishman has become deeply embroiled in litigation to get veteran residents to pay more rent .

COMMENT: So, not only are the, already meagre, pensions of Church of England priests under further threat (this coming on top of a recent loss of £1.3 billion sustained by the Commissioners) but we have to live with the shame inducing fact that this was because our church invested in company intent on making money by hiking rents and forcing people out of their homes. I wonder if the Church Commissioners will see a decrease in their pensions and wages because of this dodgy deal.

Actually, no I don't.

Big thanks to Cathy for sending this story in to MadPriest Towers.



  1. What in the name of God are the CC’s doing playing in foreign property markets? As a fellow countryman once observed: “This department is not fit for purpose”

  2. yes, they have outdone themselves with this one on all fronts, really.

    That point about the pensions had occurred to me, MP, and it is not good.

  3. Well what do you know? Marx was right. The priest, or the bishop anyway, really is the landlord’s best friend.

    Stuy-town was one of the last bastions of middle class housing left in Manhattan. It was well maintained with park spaces between buildings. There was a five to ten year waiting list for people waiting for units to become available. Tischman-Speyer bought it from Metropolitan Life in a leveraged deal. They wanted to turn it all into over-priced luxury housing. They were going to wait for all the rent-controlled and rent-stabilized tenants to move out or die off (or drive them out), then rebuild each unit and charge a king’s ransom for it to some young stock-market bandit fresh out of Yale or Harvard.

    I wonder how much the Episcopal and other churches were involved in this.
    Hell, they might as well have spent their pension funds on a wild weekend bender with a bunch of crack-whores. They would have done a lot less harm and lost a lot less money.

  4. By the way, I know two retired priests living in those Stuyvesant Town rent-controlled apartments (and there must be others, as well) who are very frightened lest all this may mean a rise in rent which they cannot afford on their pensions!

  5. Hell, they might as well have spent their pension funds on a wild weekend bender with a bunch of crack-whores.

    I wouldn’t go giving them ideas. It’s not safe.

  6. I had noticed in the New York Times some stories about the Stuyvesant Town and Peter Cooper Village problems, but wasn’t following them too closely. I had not realized that the C of E had put money into that pot.

    (Did the Diocese of Sydney have money in this pit too? I know they also have tanked.)

    As far as I know, the (Episcopal) Church Pension Fund wasn’t invested there, at least not heavily. (The CPF is very conservative and very diverse.) The general economic problems of the last couple of years have meant that the CPF is not giving us a Cost of Living Adjustment for 2010, for the first time in many years. (Neither is Social Security.) Given the economy, that’s not particularly surprising or troubling. The CPF is fundamentally very sound. The C of E could learn a lot from TEC. And not just about pension fund investments.

  7. It’ bad all over (in Canada, they have reduced the rate of pension accrual for active clergy and raised premiums to parishes, and retired clergy got no COLA this for 2010), but this really takes the cake. Obviously they haven’t heard of ethical investing.

  8. In the mean time, this week the Grand Tufti will speak at the Trinity Institute at a conference called “Building an Ethical Economy: Theology and the Marketplace” in New York City.

  9. I remember when this deal initially went through because there were court actions by the tenant associations and social service agencies trying to stop it. They predicted exactly what would happen, and it did. The bankers and big real estate bandits knew better. Oh, well.

  10. The reason for no COLA this year is not because the funds don’t have the money to pay it but rather because the Consumer Price Indices on which cost-of-living adjustments are made were either flat or declined over the last year.

    That, however, doesn’t explain why we have to pay more for stuff. (Must be a government conspiracy.)