Britain’s state church, which likes to lecture citizens on their moral failings and the evils of capitalism, walked away from a £40m property investment in New York City when the plan to profit from gentrification fell apart.
The Church of England put £40m into a $5.4bn highly debt-leveraged deal to buy the Stuyvesant Town Peter Copper Village apartments on Manhattan’s East River. The purchase was led by Tishman Speyer, a property company, and the BlackRock asset management group. The plan was to increase rents to levels unaffordable by the long-term tenants in order to take the apartment upmarket and profitable.
The Church’s plan came unstuck when the New York supreme court ruled that rent increases on 3,000 “rent-stabilisied” apartments were illegal. Tenants are to get back $200m excess rents that were increased by as much as 30 per cent. They had complained that their electricity supply became unreliable, communal washing machines did not work properly and their rubbish was not picked up.
The bursting of the property bubble made things worse for the speculators. The market price of the complex has fallen to $1.8bn. When they found that the expected profits were not to be had the investors, including the Church of England, handed back the keys to their bankers and walked away, leaving the tenants to fend for themselves.
The Church of England owns more than 112,000 acres in the UK. Its property holdings are managed by the Church Commissioners, who include the Prime Minister and the Minister for Culture.