It was always a risk. When Tishman Speyer Properties and BlackRock Inc bought a property in Manhattan for US$5.4 billion to develop the apartment complex known as Stuyvesant Town and Peter Cooper Village, there were open mouths at the sheer amount of money thrown around.
It was in October 2006 when times was good and before the financial crisis. However in 2010, it was hardly a surprise when the property owners were unable to service debt payment of US$16 million per month.
Unfortunately for Singapore, the Government of Singapore Investment Corp (GIC) is an investor in the property and with the owners’ default this will go down as another loss for Singapore. This time to the tune of US$675 million or over S$850 million.
With the coming foreclosure on Stuyvesant Town and Peter Cooper Village, GIC had already booked it losses. This means that GIC have thrown in the towel and accepted that they would probably not be seeing the S$850 million again.
I think booking the loss now is a good idea. Considering the monthly debt payment is US$16 million, there is pretty much no chance of getting the money back. Take the loss, close the books and look to the future.