NEW YORK CITY-Peter Cooper Village and Stuyvesant Town will be sold at a foreclosure auction, possibly as two separate parcels, under an order issued by a federal judge late Monday afternoon. The date of the sale will be set by court-appointed referee Melanie Cyganowski of Otterbourg, Steindler, Houston & Rosen. The order by Judge Alvin Hellerstein of US District Court in Manhattan says the sale could take place as soon as 30 days after the ruling, but a more likely timeframe is post-Labor Day, according to published reports.
“While technically it could occur within 30 days, usually they’re just getting the paperwork done by then,” attorney Harold Shultz, a senior fellow at the Citizens Housing and Planning Council, tells GlobeSt.com. “I’m speculating on this, but if I were doing the premiere sale of a property, I would prefer to take my time on it, generate more interest and get more bidders. Also, you probably don’t want to try selling this in August,” when much of the commercial real estate and financial communities take vacations. Shultz and the CHPC are following the Stuy-Town case but are not involved with it.
In contrast to the year-long foreclosure proceedings on Riverton Houses, the Harlem multifamily complex on which CWCapital successfully bid this past March, the Stuy-Town case moved relatively quickly. Just four months elapsed from the Feb. 16 filing by trustees Bank of America and US National Bank Assn.
A key difference, Shultz says, was that Riverton’s owners filed a suit in April 2009 alleging that a junior lender was blocking foreclosure. In the case of Stuy-Town, the joint venture led by Tishman Speyer Properties and Blackrock Realty, which bought the 11,227-unit apartment complex for $5.4 billion in 2006, did not contest the foreclosure proceedings, according to court documents. Additionally, Hellerstein in late April denied a motion by hedge fund Appaloosa Management to intervene in the proceedings.
Hellerstein’s ruling says that the JV owes the lenders $3.67 billion, including interest, fees and taxes on the $3-billion mortgage. A spokesman for the JV declined to comment Wednesday.
It’s unclear who will emerge as the winning bidder in the foreclosure auction. The New York Post reported Wednesday that a team including billionaire Wilbur Ross and the LeFrak Organization is eying the 80-acre complex. “We will bid only if and when we can do so in concert with the tenants,” Ross told the Post.
The tenants association at Stuy-Town plans to mount its own bid, presumably with a financial partner. “We are moving forward with our own restructuring plan, and expect to work with CWCapital and other stakeholders to ensure the right outcome,” says New York City Council Member Dan Garodnick, a Stuy-Town resident himself, in a statement. “Our goal remains the same: a conversion of the property to a non-eviction co-op or condominium structure that maximizes choice for tenants to buy or continue renting, ensures long-term affordability and protects the maintenance of this property.”
Another possibility, says Shultz, is that the creditors will place the high bid and hang onto the complex until market conditions improve. Fitch Ratings has estimated that Stuy-Town is currently worth only one-third the $5.4-billion purchase price of four years ago. Gregory Cross, chair of the bankruptcy group at Venable LLP representing the creditors in the Stuy-Town foreclosure, did not respond to GlobeSt.com’s inquiries by deadline.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
