Church of England Investment in Manhattan Goes South

Ouch! It appears the church of England is – once again – better at preaching morals than actually practicing  them. A £40 million investment in a decidedly-dodgy Manhattan luxury real estate deal has just gone up to heaven to be with Jesus. According to the Episcopal  News Service:

The Church of England stands ready to lose about $78 million invested in the largest real estate deal in American history after Tishman Speyer Properties announced it was turning over two Manhattan apartment complexes to creditors.
Tishman Speyer partnered with BlackRock Realty in 2006 to complete the $5.4 billion purchase of Stuyvesant Town and Peter Cooper Village on Manhattan’s East River. The deal has since lost $3.5 million and the firm decided to surrender the properties after falling behind on loan repayments, according to reports.

The Church of England’s £40 million investment in Stuyvesant Town was brokered in June 2007, right at the top of the property market, months before the ensuing global economic crisis set in, and when the exchange rate was 1.96 dollars to the pound.

“Stuyvesant Town offered the opportunity to invest in a large residential complex in a major international city with Tishman Speyer, a respected world-class manager,” Ben Wilson, senior media officer for the Church of England, told ENS. “In doing so we believed that the investment would provide strong financial returns and investment diversification. We undertook detailed due diligence in conjunction with external professional advisers and the fund manager, including an assessment of the identified investment risks.”

But Wilson acknowledged that the investment was “affected by the sharp fall in residential property values, and a legal ruling that many apartment rents would continue to be regulated regardless of value or the income of residents.”

Managed by the Church Commissioners, the Church of England’s historic assets are invested in stock market shares and property.

The Church Commissioners identifies one of its main responsibilities as obtaining “the best possible long-term return from a diversified investment portfolio,” according to its website, which notes that such investments meet about 18% of the church’s total running costs.

News about the property investment loss comes on the eve of a Trinity Institute conference in Manhattan that will bring together leading economists and theologians, including Archbishop of Canterbury Rowan Williams, to address the theme “Building an Ethical Economy.” Williams serves as chairman of the Church Commissioners.

“The commissioners are looking carefully at the lessons to be learnt from the loss, as well as from the impact of the financial crisis generally,” Wilson said. “This loss comes against a background of the commissioners’ property portfolio outperforming its peer group by an average of 4.6 percent every year over the last 10 years, and returning an average of 12.1 percent each year.”

Wilson told ENS that the Stuyvesant Town investment “represented less that 1% of our assets.”

The total value of the Church Commissioners’ assets at Dec. 31, 2008 (their most recent annual accounting) was some £4.4 billion, “of which investment properties accounted for some £1.3 billion,” he said. Calculated at the interbank exchange rate for that day, the total value amounted to $6.37 billion, of which the investment properties was $1.88 billion.

According to a New York Times report, Tishman Speyer “manages a $33.5 billion portfolio of 72 million square feet of property in the United States, Europe, Asia and Latin America.” The firm’s assets include New York’s Rockefeller Center and Chrysler Center.

The newspaper predicts that although the firm’s reputation might suffer, collateral damage was “expected to be minimal.”  Episcopal News.

Once again it seems the church feels that “inner peace” is achieved by “outer wealth,” whilst heavily criticizing “secular greed,” and you have to ask what on earth the CoE was doing investing £40 MILLION in a morally-questionable deal that relied heavily on illegally evicting rent controlled war-veteran tenants on low rental agreements, ripping the buildings apart to convert them into luxury apartments and sticking it to the tenants with super-high rent increases.

The whole thing fell to pieces after the real estate market collapsed and a number of tenants got together to prevent the rent increases – the New York courts found that the rent increases were illegal. Now – he is probably going to regret this – but just 2 days ago – Rowan Williams – the Archbishop of Canterbury was lecturing us on “Building an Ethical Economy.”

Which apparently allows the church to do as it pleases……..

Of course – it is not just the church losing the cassock off their back – there are plenty of secular investors, including a number of US state pension funds, who should have had some moral obligations not to get involved in this type of deal.

http://www.nytimes.com/2010/01/26/nyregion/26stuy.html?hp