Appaloosa Sues CWCapital Over Stuyvesant Town Interestby
Tepper-linked funds ask court to block $566 million payment
Apartment complex was handed to lenders after financial crisis
Funds associated with billionaire David Tepper’s Appaloosa Management LP sued to block CWCapital Asset Management LLC from recovering more than $500 million in interest from the mortgage on Manhattan’s largest apartment complex after it was sold to a group led by Blackstone Group LP last month.
CWCapital has controlled Stuyvesant Town-Peter Cooper Village since Tishman Speyer and BlackRock handed the property over to lenders in 2010 after its value plunged during the financial crisis and tenants blocked a rent increase. The city announced last month that Blackstone Group LP is leading a deal to buy the complex for $5.3 billion.
The suit was filed Thursday in state Supreme Court in Manhattan by Appaloosa Investment LP and three other funds associated with Appaloosa Management, the Short Hills, New Jersey-based firm headed by Tepper. The funds are investors in trusts with assets including a $3 billion senior loan secured by the mortgage on the complex.
CWCapital, which represents the mortgage lenders on the defaulted loan, is seeking to collect about $566 million in interest that has run on the mortgage since 2010, at a rate of 3 percent, according to the suit. The Blackstone sale will result in more than $1 billion in proceeds on the senior loan, which should be used to offset more than $130 million in losses that the trusts have suffered as well as future losses, the complaint says.
“If CWC is permitted to collect and retain this default interest, it will constitute a significant and unprecedented windfall to CWC,” Appaloosa said in the suit. CWCapital is entitled to about $45 million in fees for the years it serviced the loan and $15 million for the sale, but it isn’t qualified to collect default interest, according to the complaint.
Michael Goodwin, a spokesman for CWCapital, declined to comment on the lawsuit.
Appaloosa Investment LP in April 2010 lost a bid to join the foreclosure lawsuit after arguing that CWCapital was pursuing it in breach of its fiduciary duties to the fund, which at the time had more than $750 million at stake in trusts secured by the mortgage on the complex.
The case is Appaloosa Investment LP v CWCapital Asset Management LLC, 653741/2015, New York State Supreme Court, New York County (Manhattan).