By Patrick Hedlund
DNAinfo News Editor
STUYVESANT TOWN -- A joint venture between a hedge fund and a real estate investment firm purchased a key piece of debt at Stuyvesant Town and Peter Cooper Village Monday, putting the partnership in a position to take over as owner of the sprawling East Side complex.
Pershing Square Capital Management, L.P. teamed up with the Boston-based Winthrop Realty Trust to scoop up $300 million in mezzanine loans on the property, which is headed for foreclosure, for just $45 million.
This investment in the 11,227-apartment complex — which set a real estate record when it was purchased for $5.4 billion in 2006 — puts the joint venture in prime position to move on the property when it hits the auction block.
The mezzanine debt falls just behind the $3 billion first mortgage taken out on the complex, and the acquisition means the new partnership will likely move to foreclose on the property and become the new owner.
“We share the Tenants' Association objective to complete a non-eviction, affordable, co-op conversion of the property, which will require the restructuring of the property's first mortgage debt,” said Pershing Square Capital Management CEO William Ackman, whose company took a 77.5 percent stake in the purchase, in a statement.
The 56-building complex — which stretches along the East Side between 14th and 23rd streets, from First Avenue to the East River — currently houses about 25,000 rent-regulated and market-rate renters.
A statement from the Stuyvesant Town-Peter Cooper Village Tenants Association said the move “does not change our ability to achieve the goals that we have set out,” noting that residents “will welcome the opportunity to partner with an entity that will satisfy the tenants’ goals.”
The tenants’ group described its aims as giving residents the opportunity to purchase their apartments or to remain as rent-regulated tenants, while preserving the complex’s affordability in the future.
“As the creditors wrangle for control, the tenants continue to be united and committed to seeing the process through to the right outcome,” the statement said.
“No future owner can or will be successful without the support and participation of the tenant community,” the statement added.
Just last week, the state Supreme Court ruled that current property owner Tishman Speyer and former owner MetLife overcharged on rents while receiving tax breaks for providing affordable housing.
The decision, which charged the two landlords with illegally deregulating nearly 4,500 apartments in the complex, means the owners could be forced to pay more than $200 million in back rent to tenants.
