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Deals & Dealmakers

CW Capital makes first move towards Stuy Town foreclosure

By Sabina Mollot

After years of remaining silent on its plans for putting Stuyvesant Town/Peter Cooper Village up for sale, CWCapital made a move on Tuesday to foreclose on the property’s mezzanine debt.

Stuy Town
Stuy Town

The news then sparked the first of what is expected to be a flurry of offers for the complex with Fortress, CW’s parent company, reportedly preparing a $4.7 billion bid.

Neither Fortress or CWCapital would comment on that report, but in a brief written statement, the special servicer of the property, which also manages a chunk of the mezzanine or junior debt, said that a foreclosure sale was scheduled to take place on June 13.

The company went on to say the action “will have no impact on our residents or on property operations.”

In response to the news, which was first reported in the New York Times, ST-PCV Tenants Association Chair Susan Steinberg said she was tired of seeing the community being treated “like a football.”

“Everything that went into building a unique residential complex for the middle class has been upended in the interest of the bottom line,” she said. “We are being punted towards a goal that isn’t ours.”

The Tenants Association had partnered with Brookfield Asset Management in 2011 in the hopes of buying the complex and going condo. CWCapital had declined to negotiate though saying no business could be discussed until “Roberts v. Tishman Speyer” was settled. But after the settlement, there was still no chatter about bidding or a conversion.

DAN GARODNICK
DAN GARODNICK

Council Member Dan Garodnick said anyone could bid in the foreclosure, but CWCapital itself could be the winning bidder, using its unique position as debt servicer.

“They could bid billions of dollars without writing a check,” he said, “Because they are owed money here.”

He added that the move to foreclose on the mezz debt wasn’t really a surprise, since technically the property’s already been in foreclosure for years.

“It just hasn’t been formalized because there hasn’t been any action to foreclose on the lenders,” said Garodnick. Ultimately, he said what matters is that tenants’ rights are preserved.
In an official statement, the Council member also said the great bidding war of ‘06, in which potential owners were wrongly led to believe the sky was the limit on what they could charge for rents, shouldn’t be repeated.

“We cannot allow an overheated auction with wild expectations that puts a target on the back of rent-stabilized tenants.” he said. “We have seen that movie before. Tenants, and the City of New York, cannot afford to let that happen again.”

The Roberts v. Tishman Speyer class action suit won by the tenants several years ago will keep ST/PCV stabilized until the J-51 tax abatement expires in 2020.

On the other hand, with one-bedroom apartments in Stuy Town going for rents that start at close to $3,000, many of the newer residents of the community still consider themselves stabilized in name only.

Developer Richard LeFrak, who bid on the property in 2006, is possibly interested in doing so again, according to the Times piece.

Last August, while still a candidate for mayor, Bill de Blasio penned an op-ed for Real Estate Weekly’s sister newspaper Town & Village, saying the city should make sure ST/PCV remains affordable.

“While Peter Cooper Village-Stuyvesant Town is privately owned, the city has an obligation to keep its homes affordable for hardworking New Yorkers and their families,” he said.

A spokesperson for the mayor did not respond to a request for comment on this story, but Garodnick said he learned that a tenant-led bid would have the support of the city’s housing commissioner, Vicki Been, and the deputy mayor for economic development, Alicia Glen.

News of the imminent sale comes on the heels of a settlement over five MCIs between CWCapital and the Tenants Association and word that “Roberts v. Tishman Speyer” tenants will finally be paid the money they’re owed by CW.

Tishman, along with partner BlackRock Realty, paid a record-breaking $5.4 billion for Stuy Town and Peter Cooper Village. That was comprised of $4.4 billion in loans, $1.9 billion from investors, mostly pension funds, and little of their own money.

The partners defaulted three years later and CW Capital, as special servicer to the lenders, took over the property.

CWCapital has hired Eastdil Secured to conduct the foreclosure sale.

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