Pershing, Winthrop Oppose Move to Bar Stuyvesant Town Foreclosure Auction
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
Pershing Square Capital Management LP and Winthrop Realty Trust said they have the right to proceed with their planned foreclosure auction for Manhattan’s Stuyvesant Town-Peter Cooper Village apartment complex.
An agreement between groups of creditors doesn’t prohibit Pershing and Winthrop’s plan from taking control of the property through a foreclosure auction as senior mortgage holders argue, the companies said today in court papers in New York.
“When this court considers what the contract actually states, it must inevitably conclude that PSW’s actions fully comport with the letter and spirit of that controlling agreement,” they said, referring to their venture PSW NYC LLC.
Pershing, led by Bill Ackman, and Boston-based Winthrop are seeking the foreclosure after buying $300 million in defaulted mezzanine debt on Stuyvesant Town, Manhattan’s biggest apartment complex. Trustees representing holders of the $3 billion senior mortgage sued to stop the auction, which may put the property in bankruptcy protection. A judge in State Supreme Court in Manhattan scheduled a hearing on the dispute for next week.
Bank of America Corp. and U.S. Bancorp, trustees for the mortgage holders, said in their lawsuit that Pershing and Winthrop must first pay $3.66 billion to senior lenders before they do anything that would put them in control of the property. That amount covers the first mortgage plus interest and penalties, according to the lawsuit, filed last week.
‘Squandered’ Time
Senior lenders, who sought court permission to foreclose on the 80-acre property in February, “squandered months of lead time” while they “rejected all attempts at a consensual workout or restructuring,” according to PSW’s court papers. The venture’s economic interest would be wiped out if senior lenders foreclose on the property, it said in the papers.
“We are confident that the language of the contracts that govern this transaction support our foreclosure plan,” Edward Weisfelner, the lawyer representing PSW, said in a statement. “We look forward to a successful outcome and are eager to move ahead to meet tenants’ needs with a permanent affordable housing solution.”
Sharon Dash, a spokeswoman for CWCapital Asset Management, which represents senior lenders, declined to comment.
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 senior mortgage in January after the development’s value sank and the owners failed to raise rents for the 25,000 tenants as fast as anticipated.
The case is Bank of America Corp. v. PSW NYC LLC, 10- 651293, New York State Supreme Court, New York County (Manhattan).
To contact the reporter on this story: David McLaughlin in New York at dmclaughlin9@bloomberg.net; Oshrat Carmiel in New York at ocarmiel1@bloomberg.net
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