CW Capital Asset Management said it reached an agreement with Pershing Square Management over millions of dollars in mezzanine debt at Stuyvesant Town and Peter Cooper Village, thus giving it effective control over the property.
CW Capital said it canceled the Oct. 29 foreclosure sale of the property and will now enter the next phase of negotiating with thousands of tenants over a possible conversion to cooperative ownership, in the hopes that it can eventually recover more than $3.7 billion in debt that it controls.
“An auction really wasn’t going to help CW Capital because nobody was going to pay enough [to cover the debt],” said Ben Thypin, senior analyst at Real Capital Analytics. “This allows them to improve the value for an eventual liquidation in an environment where the property would garner a higher price.”
City Council member Dan Garodnick, a Stuyesant Town resident and long-time advocate for residents, said the settlement will allow both sides to move forward with negotiations on an eventual tenant buyout of the property.
“We are pleased that CW Capital can move forward with the tenants on this restructuring, and we expect them to work responsibly and in good faith with the residents of this community,” Garodnick said.
The settlement follows months of legal wrangling over control of the 11,000-unit complex, which was acquired by Tishman Speyer for $5.6 billion in 2006, the biggest residential real estate deal in U.S. history.
Earlier this year, a group led by Tishman Speyer defaulted on the mortgage, leading to an epic battle to salvage millions in mezzanine debt that was at risk of being wiped out and to resolve a landmark legal dispute in which the owners would have to refund hundreds of millions of dollars in rent overcharges to current and former tenants.
Pershing Square Management, after acquiring about $300 million in mezzanine debt, fought in court for months for the right to take over the property through a foreclosure sale.
Rose Associates was named last week to formally take over as property manager of the complex. Rose previously managed the property under its former owners, MetLife.