Hedge Fund manager Ackman Buys Stuy Town Debt

Activist hedge fund manager Bill Ackman, who recently made a splash in his battle with retailer Target, is making a move for beleaguered Manhattan apartment complex Stuyvesant Town-Peter Cooper Village.

In a deal that could catapult the hedge fund heavyweight into the position of landlord for the complex’s 25,000 residents, Ackman announced this morning that his fund, Pershing Square Capital Management, has teamed up with real-estate venture Winthrop Realty Trust to buy a pivotal piece of debt in the apartment complex.

The companies said they formed a joint venture that has acquired 100 percent of $300 million worth of StuyTown’s so-called mezzanine loans for a mere $45 million.

The purchase places them in a leadership position for the $1.4 billion in mezzanine debt that sits on top of the property’s $3 billion mortgage. So by foreclosing on the $1.4 billion in mezzanine loans, which the partners are expected to do on Aug. 25, they stand to take over the entity that owns the $3 billion mortgage, and thus become the new owners.

“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,” Ackman said in a statement.

Source

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