Tishman Speyer In Talks With NY Fed To Rework $1.4 Billion In Loans

Real-estate giant Tishman Speyer is trying to renegotiate some $1.4 billion in loans backed by Chicago office towers with an unusual creditor: the Federal Reserve Bank of New York.

The Fed inherited the debt when it assumed assets from Bear Stearns in 2008 as part of that firm's distressed sale to J.P. Morgan Chase & Co. (JPM). Now, the regulator is squaring off against Tishman Speyer as it seeks to renegotiate the loans that are secured by a $1.7 billion portfolio of Chicago office buildings, the company confirmed Monday.

ChicagoBusiness.com, a Crain's Web site, first reported the negotiations on Saturday. Tishman purchased the five office buildings, that included the Civic Opera Building, at the top of the market in 2007 and that totaled 6.5 million square feet, according to a press release at the time.

The Fed is playing hard ball in the talks; it has frozen a reserve fund for the properties. "During the course of these discussions, the lenders have delayed funding certain capital expenditures that already had been approved and that were required under the loan agreement," the company said in a statement. Tishman noted that the deterioration in commercial property values prompted the need for loan modifications.

Tishman added that it expected the negotiations "will be concluded soon" and the financial status of its other invested properties won't be affected.

Rick Matthews, a spokesman for Tishman, said the developer wasn't in default, technical or otherwise on any of the loans as reported by the ChicagoBusiness.com article. "Tishman is current and there has been no default," he said.

A representative from the Federal Reserve wasn't immediately able to provide comment.

This marks another setback for the Tishman Speyer empire, whose holdings include Manhattan's Rockefeller Center and the Chrysler Building. In recent months, Tishman has been struggling with a slew of top-of-the-market acquisitions, including the sprawling New York apartment complexes Peter Cooper Village and Stuyvesant Town, a large office portfolio in the Washington area, and Archstone-Smith, a high-end apartment real-estate investment trust.

- By A.D. Pruitt, Dow Jones Newswires; 212-416-2197; angela.pruitt@dowjones.com

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