Brookfield Asset Management Inc. is working with the tenants association at Stuyvesant Town-Peter Cooper Village on a bid to buy Manhattan’s biggest apartment complex from its debt holders.
Brookfield, a Toronto-based investment firm that manages about $150 billion, is teaming with the tenants on a conversion proposal that will allow residents to buy their apartments “at a reasonable price,” Al Doyle, the association’s president, said in a letter posted on the group’s website. Tenants would have the option to continue to rent, he said.
The 80-acre (32-hectare) enclave, home to more than 25,000 people, has been under the control of CWCapital Asset Management LLC since last year. The company is representing bondholders on a $3 billion senior mortgage after Tishman Speyer Properties LP and BlackRock Inc. (BLK) defaulted on the loan, undone by a plunge in the property’s value and a failed plan to raise rents.
“We cannot -- and will not -- sit idly by and wait for our future to be determined for us,” Doyle wrote. “With Brookfield on our team, CWCapital, the entity representing the senior bondholders of the property, will find it extremely difficult to ignore us.”
‘Robust Community Process’
The structure of the bid isn’t yet complete. There will be a “robust community process” in the coming months to develop a proposal, which will then be presented to CWCapital, according to a joint statement today from Brookfield and the tenants association.
City Councilman Daniel Garodnick, who lives in Peter Cooper Village and has been advocating for tenants since before its 2006 sale to Tishman Speyer and BlackRock, said the deal in the works would satisfy both residents and bondholders. The complex has provided a park-like environment, with trees, benches and play areas, for middle-class families since it was built after World War II, and Garodnick and other city officials have vowed to keep it that way.
Debt holders “will likely do best under the plan than under any other plan,” he said in an interview after a press conference today at the complex. “This plan will have the support of the people who live here, which will ensure stability and order and will also deliver to them the best outcome.”
Served on Plate
Garodnick declined to say how much Brookfield is expected to invest. CWCapital will like the offer, he said.
“It’s as if we’re serving it up to them on a plate,” he said during the press conference.
Elizabeth Orcutt, a CWCapital spokeswoman, said in an e- mail that the company has no comment on today’s announcement.
The apartment complex, located on Manhattan’s east side between 14th and 23rd streets, has more than 11,000 units. Tishman Speyer and BlackRock paid $5.4 billion for the development near the peak of real estate prices, with plans to convert rent-regulated units to market rates.
The transaction was financed with $3 billion of debt that was bundled with other commercial mortgages and sold as bonds. The deal went sour after the property bubble burst and a state court said some renters had been subject to improper rate increases. Investors that lost money included the California Public Employees’ Retirement System and the Church of England.
Dialogue With Tenants
Brookfield and the tenants plan to develop purchase price proposals for the apartments as the bid is put together, according to their statement today.
“A non-eviction conversion plan can only be successful if large numbers of tenants find the deal appealing enough to want to buy their units,” they said.
The dialogue with residents will start Dec. 3 at a general meeting of the association, scheduled for 1 p.m. at Baruch College on Lexington Avenue and East 23rd Street, according to the tenant association’s website.
The joint release contained statements of support for the proposed bid from both of New York’s U.S. senators, Charles Schumer and Kirsten Gillibrand, as well as U.S. Representative Carolyn Maloney, Manhattan Borough President Scott Stringer, state Senator Tom Duane.
‘Stability and Affordability’
“In the coming months, we will work with the tenants association on a proposal that will provide real value for Stuyvesant Town-Peter Cooper Village creditors, while giving tenants the stability and affordability they deserve,” Barry Blattman, a Brookfield senior managing partner involved in the bid, said in the statement.
Margaret Salacan, who has lived in a one-bedroom apartment in Stuyvesant Town since 1988, said she was hopeful about the plan.
“I’m excited because the tenants can finally take back control of their destiny,” said Salacan, a personal assistant who works from her apartment.
Stuyvesant Town and Peter Cooper Village have lost some of their neighborhood appeal as more “transient” renters moved in after Tishman Speyer’s purchase, Salacan said.
“It has been a landlord who is just concerned about money, just concerned about renovating apartments, moving as many people in as quickly as possible,” said Salacan.
Brookfield Asset’s principal lines of business are property, energy, roads, utility lines and other forms of infrastructure, with investments on all five continents. It is the parent company of Brookfield Office Properties (BPO), owner of lower Manhattan’s World Financial Center and unwitting host of Occupy Wall Street demonstrators for two months on a plaza it owns downtown, until police broke up the campsite on Nov. 15.
Brookfield owns about 12,000 multifamily units in 11 states and one Canadian province, Andrew Willis, a spokesman, said in an e-mail. Part of that comes via a 65 percent stake in Fairfield Residential Co. of San Diego., which it acquired last year, he said.
Last year, Brookfield Asset was part of the investor group that brought General Growth Properties Inc. (GGP), the second-biggest U.S. mall landlord, out of Chapter 11 bankruptcy.
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