Ackman Group's Stuyvesant Town Foreclosure Auction Postponed
Pershing, Winthrop Oppose Bar to Stuyvesant Auction
Adam Rountree/Bloomberg
The Stuyvestant Town-Peter Cooper Village apartment complex in New York.
The Stuyvestant Town-Peter Cooper Village apartment complex in New York. Photographer: Adam Rountree/Bloomberg
Aug. 19 (Bloomberg) -- Bloomberg News reporter Oshrat Carmiel talks about today's postponement of a foreclosure auction for New York’s Stuyvesant Town-Peter Cooper Village apartment complex after senior creditors sued to block a group led by Pershing Square Capital Management LP from gaining control. Bill Ackman’s Pershing Square and Winthrop Realty Trust had planned an Aug. 25 foreclosure auction after buying mezzanine debt on Manhattan’s largest apartment complex. Carmiel speaks with Carol Massar on Bloomberg Television's "Street Smart." (Source: Bloomberg)
A New York judge halted a foreclosure auction planned for next week on Stuyvesant Town- Peter Cooper Village, Manhattan’s biggest apartment complex, as creditors wrangle for control of the property.
A hearing will take place Sept. 2 on how to proceed, according to a statement today from CWCapital Asset Management LLC, the special servicer for the senior mortgage on the property. Bill Ackman’s Pershing Square Capital Management LP and Winthrop Realty Trust had scheduled an Aug. 25 foreclosure auction after buying $300 million in defaulted mezzanine debt.
Senior lenders, who had been given permission to foreclose in June, also agreed not to initiate an auction before the hearing, according to an e-mailed statement from Pershing and Winthrop. The two companies want to take control of the complex under a plan that the senior mortgage holders claim will put the 80-acre property in bankruptcy.
“We remain confident in our right to acquire control of the property owner while preserving the first mortgage lender’s collateral,” the Pershing and Winthrop statement said.
Bank of America Corp. and U.S. Bancorp, trustees for holders of the $3 billion senior mortgage, sued to stop the venture’s foreclosure yesterday. The complaint, filed in the New York state Supreme Court in Manhattan, claims the Pershing and Winthrop plan violates terms of an existing agreement among creditors. New York State Supreme Court Justice Richard Lowe is overseeing the case.
$3.66 Billion
As junior creditors, Pershing and Winthrop must pay senior lenders $3.66 billion, which covers the first mortgage plus interest and penalties, before they do anything that might put them in control of the property, according to the lawsuit.
The Pershing and Winthrop venture agreed to a “short adjournment” of the auction until legal objections raised by the senior lenders, represented by CWCapital, are resolved in court, the companies said in the statement.
Tishman Speyer Properties LP and BlackRock Inc. bought Stuyvesant Town-Peter Cooper Village for $5.4 billion in 2006, a record New York commercial real estate deal at the time. They stopped payments on the $3 billion senior mortgage in January after the development’s value sank and the owners failed to raise rents as fast as anticipated.
CWCapital “has spent the previous nine months engaged in detailed planning to ensure a smooth transition of this complex property that is home to 25,000 New York City residents,” the company said in its statement today. It “remains committed to continuing its close communication with tenant advisors, city officials and others to ensure the stability of this community, which includes the expeditious resolution of the issues currently at hand.”
The case is Bank of America Corp. v. PSW NYC LLC, 10- 651293, New York State Supreme Court in Manhattan (New York County).
To contact the reporter on this story: Oshrat Carmiel in New York at ocarmiel1@bloomberg.net
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