Ackman: Stuy Town co-op conversion could have yielded $2B in profits

It’s no wonder hedge fund bigwig Bill Ackman put up such a fight for control of Stuyvesant Town and Peter Cooper Village: he thought he could squeeze a “$2 billion potential profit opportunity” out of a co-op conversion at the massive complex, he told attendees of the Bloomberg Link Hedge Funds 2010 Conference yesterday. Ackman’s Pershing Square Capital Management and joint venture partner Winthrop Realty put $45 million into their purchase of $300 million worth of defaulted junior debt on the property earlier this year and had attempted to foreclose. The plan, Ackman said, was to split the profits with Stuy Town’s 25,000 current tenants as “an inducement for the tenants to go along for the ride.” But after a New York state court rejected their proposal — “a wrong ruling,” Ackman declared — the partners were able to recover their investment in a deal with senior lenders. Meanwhile, Ackman said Pershing’s deal to help bring General Growth Properties out of bankruptcy last month was “the best investment we’ve made.” [Bloomberg]