By Ilaina Jonas
NEW YORK, Sept 13 (Reuters) - Manhattan tenants who live in Stuyvesant Town/Peter Cooper Village could choose to partner with a Pershing Square Capital Management venture in a deal for the vast apartment complex, unless a judge blocks the maneuver.
Under the proposal from the venture led by William Ackman Pershing Square, the Tenants Association, which represents about 25,000 residents, would have an ownership interest in the property. Tenants would not have to put in any money.
The proposal was outlined in a Sept. 12 letter from William Ackman and Winthrop Realty Trust CEO Michael Ashner, partners in a new company called PSW NYC LLC.
In commercial real estate, new companies are often set up for the sole purpose of owning certain properties. The names are often addresses or acronyms of the property or the investors.
The Pershing/Winthrop venture is trying to foreclose on the ownership of PVC ST, the company that owns the vast apartment complex that includes 56 buildings on 80 acres on the east side of Manhattan. The letter follows a presentation the venture made to the tenant's association.
The tenants could veto all major decisions about the plan to convert some of the 11,227 units into co-ops, while allowing other apartments to remain rent-stabilized.
However, New York State Supreme Court Justice Richard Lowe has yet to rule on whether the Pershing/Winthrop venture can foreclose on the ownership and thwart the bondholders who hold a $3 billion mortgage on the property. The mortgage is secured by the property and is senior to PSW's claim, which is secured by the shares in the complex-owning company, PVC ST.
The property became a textbook case of excessive lending and spending on U.S. commercial real estate during the boom of 2005 through 2007. A group led by Tishman Speyer Properties paid $5.4 billion for the two apartments complexes and created PVC ST to do the deal. The property is now valued at less than half of what the Tishman Speyer group paid.
'There are many hurdles to overcome to ensure that this will actually be a good deal for the tenants, or for the City, but it is worth exploring, and we will give it a hard look,' said Daniel Garodnick, the New York City Council member who represents the district and lives in Peter Cooper Village.
If the Pershing Winthrop group prevails in court, it could go ahead and take control of the owner. As the property's new owner, it could put the project into bankruptcy to force a restructuring of the mortgage plus about $700 million in fees and interest.
CWCapital, which represents the bondholders, has argued that as a junior creditor the Pershing/Winthrop venture missed the opportunity to take over the property when the Tishman Speyer venture defaulted on loans in January. CWCapital says that on Oct. 4 it plans to auction off the property to the highest bidder.
Neither CWCapital nor the Pershing venture can proceed until the judge rules on an injunction he placed on both parties on Aug. 19. The Pershing/Winthrop group also has filed to have CWCapital's complaint dismissed.
Winthrop, which is working with Pershing, owned 9 percent of the original $300 million junior loan. Last month, Ackman bought 77.5 percent of this junior loan; Winthrop ended up with a 22.5 percent ownership. The deal valued the loan at $45 million, or 15 cents on the dollar.
The tenants' association has received about 40 to 50 inquiries from potential partners, many of whom have proposed allowing a percentage of tenants to own their apartments by converting them into a co-operative ownership company, Garodnick said.
In a co-op, tenants own shares in the company that owns their apartments.
(Reporting by Ilaina Jonas; Editing by Phil Berlowitz) Keywords: REALESTATE STUYTOWN/ (ilaina.jonas@thomsonreuters.com ; +1 646 223 6193; Reuters Messaging: ilaina.jonas.reuters.com@reuters.net; e-mail: ilaina.jonas@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
NEW YORK, Sept 13 (Reuters) - Manhattan tenants who live in Stuyvesant Town/Peter Cooper Village could choose to partner with a Pershing Square Capital Management venture in a deal for the vast apartment complex, unless a judge blocks the maneuver.
Under the proposal from the venture led by William Ackman Pershing Square, the Tenants Association, which represents about 25,000 residents, would have an ownership interest in the property. Tenants would not have to put in any money.
The proposal was outlined in a Sept. 12 letter from William Ackman and Winthrop Realty Trust CEO Michael Ashner, partners in a new company called PSW NYC LLC.
In commercial real estate, new companies are often set up for the sole purpose of owning certain properties. The names are often addresses or acronyms of the property or the investors.
The Pershing/Winthrop venture is trying to foreclose on the ownership of PVC ST, the company that owns the vast apartment complex that includes 56 buildings on 80 acres on the east side of Manhattan. The letter follows a presentation the venture made to the tenant's association.
The tenants could veto all major decisions about the plan to convert some of the 11,227 units into co-ops, while allowing other apartments to remain rent-stabilized.
However, New York State Supreme Court Justice Richard Lowe has yet to rule on whether the Pershing/Winthrop venture can foreclose on the ownership and thwart the bondholders who hold a $3 billion mortgage on the property. The mortgage is secured by the property and is senior to PSW's claim, which is secured by the shares in the complex-owning company, PVC ST.
The property became a textbook case of excessive lending and spending on U.S. commercial real estate during the boom of 2005 through 2007. A group led by Tishman Speyer Properties paid $5.4 billion for the two apartments complexes and created PVC ST to do the deal. The property is now valued at less than half of what the Tishman Speyer group paid.
'There are many hurdles to overcome to ensure that this will actually be a good deal for the tenants, or for the City, but it is worth exploring, and we will give it a hard look,' said Daniel Garodnick, the New York City Council member who represents the district and lives in Peter Cooper Village.
If the Pershing Winthrop group prevails in court, it could go ahead and take control of the owner. As the property's new owner, it could put the project into bankruptcy to force a restructuring of the mortgage plus about $700 million in fees and interest.
CWCapital, which represents the bondholders, has argued that as a junior creditor the Pershing/Winthrop venture missed the opportunity to take over the property when the Tishman Speyer venture defaulted on loans in January. CWCapital says that on Oct. 4 it plans to auction off the property to the highest bidder.
Neither CWCapital nor the Pershing venture can proceed until the judge rules on an injunction he placed on both parties on Aug. 19. The Pershing/Winthrop group also has filed to have CWCapital's complaint dismissed.
Winthrop, which is working with Pershing, owned 9 percent of the original $300 million junior loan. Last month, Ackman bought 77.5 percent of this junior loan; Winthrop ended up with a 22.5 percent ownership. The deal valued the loan at $45 million, or 15 cents on the dollar.
The tenants' association has received about 40 to 50 inquiries from potential partners, many of whom have proposed allowing a percentage of tenants to own their apartments by converting them into a co-operative ownership company, Garodnick said.
In a co-op, tenants own shares in the company that owns their apartments.
(Reporting by Ilaina Jonas; Editing by Phil Berlowitz) Keywords: REALESTATE STUYTOWN/ (ilaina.jonas@thomsonreuters.com ; +1 646 223 6193; Reuters Messaging: ilaina.jonas.reuters.com@reuters.net; e-mail: ilaina.jonas@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.