ST-PCV TA to partner with Brookfield on bid

By Sabina Mollot

and Heather Holland

Barry Blattman, senior managing partner of Brookfield

On Wednesday, the Stuyvesant Town-Peter Cooper Village Tenants Association announced that it had formed a partnership with the firm Brookfield Asset Management in a plan to put together a bid to purchase ST/PCV and convert to condos or co-ops.

The bid attempt would be the second tenant-led one — the first was in 2006, though the Tenants Association, working alongside Council Member Dan Garodnick, ended up losing to Tishman Speyer — or winning, as they later looked at it.

So far, there has been no bid put together, so it’s not clear whether CW Capital will accept the offer, which was extended by the TA on Tuesday.

However, Garodnick, who hosted a press conference outside Stuyvesant Town, along with other local elected officials and reps from Brookfield, said it was understood that any offer would need to be “competitive.” Previously, legal and financial advisors for the TA had said an offer would need to be at least $3 billion in order to satisfy the bondholder trust CW Capital represents.

The talks between the Tenants Association and Brookfield have been going on quietly for months now and the company was among a group of 50 individuals and groups that had been courting the TA with plans for conversions, according to Garodnick.

On choosing Brookfield, Garodnick said it wasn’t anything against the other suitors.

“They have experience in complicated transactions like this one,” he said of Brookfield, adding, “We felt they were a serious player in real estate and that they shared the goals of the Tenants Association.” Namely those goals include a conversion plan that would allow tenants to remain on as stabilized renters if they choose and give those who wish to buy an attractive insider’s price. The other goals are to maintain affordability and stability of the community with tenants free of harassment, keeping the open spaces open and improving maintenance and upkeep of the property. To maintain stability, the plan includes keeping some of the apartments permanently affordable through funding from government sources.

“This is our community. These are our homes. This bid is about taking control of our own future, protecting current residents and ensuring that Stuyvesant Town and Peter Cooper Village remain affordable to middle class families for the long haul,” said Al Doyle, president of the Tenants Association in a written statement.

At the conference, John Sheehy, a resident of Peter Cooper Village and a member of the board of directors of the TA, said, “The benefit is returning stability to the community. People will finally have a sense of comfort of having an established owner. I don’t see any downside.”

The TA has spent a year and a half interviewing prospective financial backers for this idea, added Sheehy.

So far, the TA hasn’t gotten any response from its sudden news to CW, but Garodnick said he expected the property’s special servicer would “recognize the importance of what we are trying to do. The fact that we are looking forward to putting together a credible bid, I think they will take that seriously.”

A spokesperson for CW told Town & Village he couldn’t comment on the plan since an actual proposal hasn’t been offered.

Brookfield was chosen by the TA with guidance from its financial and legal advisors from the firms Moelis & Company and Paul Weiss Rifkind Wharton & Garrison. Both firms had been offering their services sans fee to the association with the assumption that they’d eventually get some payment through the completion of a conversion deal.

The way the partnership would work, if a conversion were to occur, is that Brookfield would be the sponsor, putting together the money for the purchase, offering the units for the sale, and then remaining the landlord and manager of the unsold apartments.

Though there is no way yet to come up with figures for what unit prices would be, a rep from Brookfield will be attending a Tenants Association meeting scheduled for Saturday to speak about the plans.

Garodnick said he anticipates one concern neighbors will have is whether Brookfield’s intentions are “benevolent” towards tenants, which he said he believes they are, due to the fact that the company has been working closely with the TA.

Additionally, he thought many people would wonder what their own chances were of being able to buy, which he said is still too soon to say.

“It is too early to answer that question—We won’t know until we know what the bid price is and what price CW Capital is willing to accept to consummate a deal.”

The Tenants Association said it expects to offer a bid within the next few months.

On Wednesday, Barry Blattman, senior managing partner of Brookfield, called ST/PCV “a fantastic part of New York City” and “the kind of real estate that our company covets.

“We demonstrated (to the TA) that we have the mentality to recognize what the community wants and that we are able to handle the complicated process to come,” he said. “With the economy being how it is, there’s a lot of risk now and that is the reason CW would find it attractive to make a move. There’s a risk to waiting.”

Following the sidewalk press conference, a few residents shared their opinions of the plan.

Edward Miller, a Stuyvesant Town resident for over 60 years, said, “I think this is a great idea. I just want an affordable place to live in, and I think it will happen with this plan.”

In agreement was Michael O’Brien, a born-and-raised resident of Stuyvesant Town for 43 years.

“It’s a long time coming,” he said. “We’ve endured a lot after Tishman’s default. There’s been no owner and a decrease in service. I look forward to a correcting of these missteps. If enough current tenants developed formal stakes in this place, I think it will work. (Currently) they offer redundant amenities to try to lure rich transients into the complex. They’ve been luring everyone but families for the past three years.”

Less optimistic about a conversion was another longtime resident who was skeptical that tenants who opt out of buying wouldn’t be harassed. The resident, who didn’t want his name published, said, “When have you ever heard a landlord come in and say: Our first order of business is to harass the tenants? I know the law, but I want to know what guarantees there are besides that.”  He added, “I wish they could tell me why I’d be better off besides saying I wouldn’t be harassed.”

On the amount of apartments that could remain affordable permanently, he said he doubted it would be enough to cover all the remaining renters.

In its company bio, Brookfield, a more than century-old company, said it has a history of owning and operating assets with a focus on real estate, infrastructure, power and private equity. It owns more than 20 million square feet of real estate in Manhattan, as well as being a developer of residential properties throughout North America.

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2 thoughts on “ST-PCV TA to partner with Brookfield on bid

  1. There are many more wrinkles to all this than your article indicates. The amount of money to be cleared from this property as apartments vacate over a 20 to 40 period is huge. As much as 4-5 billion dollars. There’s a legal requirement that 15% of existing tenants must indicate an willingness to buy for a plan to be accepted. The greatest incentive for any developer is to eliminate competition through any means (like getting the TA endorsement & political endorsements) and to work things so that the apartment prices get them as close to a 15% tenant buy-in as possible so they can sell the rest of the apts at market rate as the vacate (the more apts they have to sell at market rate, the more money they make). The only power the tenants have is to influence and somewhat control how the buyer voting occurs. Without out that kind of discussion and control, the voting might go like this: Plan A (higher price) – 18% indicate they will buy; Plan B (lower price) – 40% indicate they will buy. Plan B benefits more tenants, but Plan A will render more money to the developer so he offers more money to CW. So CW chooses Plan A. But if tenants KNOW how to control their vote, then the voting goes like this: Plan A gets 5% buy-in and Plan B gets 40% buy-in. This way CW has to go with Plan B because Plan A doesn’t meet the 15% buy-in legal requirement.

  2. I can see no clear reason why the Tenant Association Exec Board & Dan Garodnick formed a ‘partnership’ with Brookfield when Brookfield has not even presented a full plan. There is no clear reason why this so-called partnership is even necessary. Right now there are only 2 players left: Guterman-Westwood & Brookfield. Guterman is a very credible player. Brookfield is a very credible player. As possible partners at this point BOTH should be considered by the tenants. CW will decide which plan it will accept for review by New York State. It’s in the tenants’ best interests to know what each plan offers them. The early endorsement of Brookfield has not served the tenants well. And all the information about Guterman’s full plan was not conveyed to tenants as it should have been. In the case of Brookfield, we’ll have to wait as it hasn’t presented a full plan yet. What possible sense could it make to have endorsed Brookfield when they have not yet presented a full plan? What possible sense does it make for any tenant or tenant group to endorse any sponsor without having compared the plans involved and without having asked probing questions publicly?

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