CWCapital Asset Management has moved one step closer to foreclosing on the vast Stuyvesant Town/Peter Cooper Village residential complex in lower Manhattan. The special servicer, who represents the senior debt holders, filed a motion Thursday asking that the court appoint a referee to sell the 11,000-unit complex.
In the motion, CW also requested “that the property be offered for sale as separate parcels and collectively as one parcel and that the property be sold to the bidders with the highest and best offers,” according to the court document filed with the U.S. District Court for the Southern District in New York. The court has yet to determine the value of the property or amount due creditors for the defaulted loans.
Real estate experts said the filing was the next logical step in the foreclosure proceeding. Meanwhile, tenants are moving forward with their own restructuring plan and expect to work with creditors to ensure the right outcome, according to City Councilmember Daniel Garodnick, who represents the area. “We are not in favor of prolonged legal wrangling,” he said. “We want to see a swift and clean process that sets this property on a secure footing into the future.”
It is highly unlikely, however, that the property would be sold before rent issues are resolved. Last year, New York’s highest court ruled that owners of Stuyvesant Town/Peter Cooper Village had improperly deregulated apartments while receiving tax breaks known as J-51s, which are awarded for making building improvements. However, the court didn’t rule on whether its decision should be applied retroactively, or specify how to recalibrate current rents because of the decision. Those issues are still being addressed by the lawyers for all sides. Until an agreement is reached, it would be very difficult to determine rents or cash flows. Also, any new owner would be liable for paying tenants’ back rent, which lawyers had estimated would reach $200 million.
Tishman Speyer Properties and BlackRock Inc. bought Stuy Town for $5.4 billion in 2006 at the height of the market. They defaulted on the $3 billion mortgage earlier this year.