The agreement sets aside $68.75 million to compensate over 21,000 tenants for rent overcharges from Jan. 22, 2003 through Dec. 31, 2011 as a result of rent deregulation. The owners will also abandon efforts to recover $78.1 million in past rent reductions.
The settlement also continues rent stabilization through June 2020 for each of the more than 4,000 formerly decontrolled apartments at issue in the suit.
The agreement, which still requires final court approval, may pave the way for tenants to finally be able to buy their apartments. A court hearing on the preliminary settlement was scheduled for April 9, 2013.
A condo conversion would come after years of financial wrangling that included near-bankruptcy.
The 80-acre property has been controlled by CWCapital Asset Management LLC since 2010. The company represents bondholders on a $3 billion mortgage after Tishman Speyer Properties LP and BlackRock Inc. defaulted on the loan as the property's value sank and a plan to raise rents fell through.
Tishman Speyer and BlackRock paid a hefty $5.4 billion for the development in 2006, before the mortgage crash, with plans to convert rent-regulated units to market rates.
Investors who lost money include the Church of England and the California Public Employees' Retirement System.
The sprawling Manhattan complex of 110 buildings and 11,000 apartments was built after World War II. The apartments were intended as affordable housing for returning veterans.
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