Two items from the Wall Street Journal on the Church of England’s play in the Manhattan apartment market, and its defense of hedge funds.
High-Profile Tishman/BlackRock Property in New York in Danger of Default:
The sprawling Manhattan apartment complex known as Peter Cooper Village and Stuyvesant Town — acquired for $5.4 billion in 2006 by a venture of Tishman Speyer Properties and a unit of BlackRock Inc. — is running out of cash. As of the end of September, it had $33.7 million left of the $400 million in interest reserves set up to service its debt, according to the people familiar with the matter. At its current burn rate of about $16 million per month, the reserve could be depleted before the end of the year, the people said. Others have said the venture could avoid default until February.
The ownership, which includes a roster of high-profile investors from the Church of England to the California Public Employees’ Retirement System, has no current plans to inject more capital into the venture, according to the people. Lenders who financed the deal first projected the complex’s net operating income would triple to $336 million in 2011 from $112 million in 2006, according to Deutsche Bank AG. But net income is projected to be $139 million this year, according to Realpoint LLC, a credit-rating agency.
Investors who bought into the deal were confident that real-estate manager Tishman Speyer would be able to greatly boost profits by raising rents in Manhattan’s sizzling apartment market.
Church of England Is Unlikely Defender of Hedge Funds:
Only last year, the Archbishop of York was calling hedge funds “bank robbers” for profiting from the fall in bank stocks. Now, a group of six of the U.K.’s largest charitable foundations, including the Church of England, has told a House of Lords committee that a proposed EU directive would “significantly restrict our ability to generate funds to pursue our charitable missions and thus reduce our impact for public good.”
The proposed rules would bar managers from outside the EU from marketing their services to EU-based investors. EU managers also would be barred from marketing within the bloc until they submitted to regulation involving disclosure of data to regulators and investors, leverage restrictions and using EU-authorized institutions as depositaries. The Church’s commissioners include John Sentamu, the archbishop of York.
And from The Times:
Two weeks after the Archbishop of Canterbury attacked the “unreal” financial culture and lack of repentance in the City of London, the Church of England has launched a robust defence of hedge funds.
The Church Commissioners, who manage the £4.4 billion assets — down from £5.7 billion in 2007 — of the established Church, have criticised European proposals to regulate hedge funds.
A new European Union directive designed to limit the way hedge funds are managed restricts the Church’s ability to make money, the Church’s investment managers warn. [Read letter to Parliament here.]