Blackstone takes ownership of ST/PCV

Jon Gray, global head of real estate for Blackstone Photo by Sabina Mollot

Jon Gray, global head of real estate for Blackstone (Photo by Sabina Mollot)

By Sabina Mollot

Blackstone and Ivanhoé Cambridge announced on Friday that they closed on the deal to purchase Stuyvesant Town and Peter Cooper Village. This means that the companies have assumed ownership and CWCapital, the special servicer since 2010, no longer has any ownership interests in the property.

The property wound up with a price tag of $5.45 billion, the New York Times reported, which would make the cost even more than that of the historic sale to Tishman Speyer. However, according to a spokesperson for Blackstone, the net price paid was still the previously reported amount of $5.3 billion. The previous figure includes full payment of transfer taxes. Prior to announcing the deal in October, the city had agreed to provide Blackstone with around $225 million in tax breaks and a loan that will be forgiven.

Meanwhile, the closing was rushed in order to prevent yet another pesky lawsuit against CWCapital, this time threatened by commercial landlord SL Green, according to the Times. SL Green was involved the 2006 sale of the property, having lent and lost about $200 million. But perhaps more importantly, the article noted, a real estate investor whose partners include Fortress, CW’s parent company, had challenged a midtown skyscraper SL Green wanted to build. “Fearing that the suit could delay the closing, the company offered SL Green what it considered a token amount, $10 million.”

This reported threat came on the heels of another suit against CW, this one by a group of lenders led by hedge fund Appaloosa, being withdrawn. That group had filed suit over CW being able to walk off with a reported $566 million in fees from the sale and other services rendered at Stuyvesant Town.

CWCapital didn’t comment on this, instead offering a statement noting its accomplishments at the property such as boosting income and bringing “stability.”

“Since taking over PCVST, CWCapital has resolved four major litigations, doubled cash flow and tripled the value of the asset,” said Andrew MacArthur, managing director at CWCapital. “We are very pleased that we have achieved a full recovery for the bondholders we represent while simultaneously delivering long-term stability to the PCVST community.”

As special servicer, CW raised net operating income at the property from $110 million to $210 million and implemented $150 million in capital improvements to upgrade the infrastructure.

On the closing, Jon Gray, Global Head of Real Estate for Blackstone, cheered the news in an official statement.

“We are proud to have entered into long-term partnership with the PCVST community and the City of New York,” he said. “We look forward to working together with them to preserve what makes this community so special.”

Daniel Fournier, chairman and CEO of Ivanhoé Cambridge said, “We are honored to share with Blackstone the responsibility of the future of PCVST. This investment is a win-win for the community of 30,000 residents, for our investors and for New York.”

The deal, touted as “the mother of all preservation deals,” by Mayor Bill de Blasio, will preserve affordability at 5,000 of the complex’s apartments for the next 20 years. There are also some protections for the 1,400 “Roberts” tenants while for market rate residents, the deal maintains the status quo.

Council Member Dan Garodnick also commented on the closing to welcome the new owner.

“For too long, the residents of Stuyvesant Town and Peter Cooper have faced an uncertain future. That ends today,” he said. “We welcome Blackstone and Ivanhoe Cambridge, and look forward to working with them to deliver a stronger and more stable community. After nine years of fighting back against efforts to undermine tenants’ rights, we now find ourselves in a much better position. With the preservation of 5,000 units for middle class New Yorkers, this deal is a very positive outcome for both current and future tenants, and for the city.”

Since announcing the purchase in October, Blackstone has been issuing surveys and conducting focus groups to get tenant feedback on issues of importance to the community. Blackstone spokesperson Paula Chirhart said the focus groups just concluded last week though the company still welcomes any feedback and is keeping its hotline for tenants open.

With regards to matters like management of the property and other issues, Blackstone plans to make additional announcements early in 2016.
Eastdil Secured’s Doug Harmon acted as the exclusive advisor in the transaction.

Although the sale didn’t come with an option to convert to condos, as the ST-PCV Tenants Association had pushed for, the Tenants Association still praised news of the sale in October and following the closing.

“Today’s closing and transfer of ownership of our community to Blackstone ends a very turbulent decade,” said Susan Steinberg, president of the Tenants Association. “The outcome could have been disastrous to our residents given the predatory nature of other interested developers. Blackstone has embraced affordability and the principles that the Tenants Association developed years ago for ownership of Stuyvesant Town and Peter Cooper Village, and their outreach to tenants so far has been laudable.”

She also thanked the TA’s counsel, Paul Weiss Wharton & Rifkin and Moelis & Company, “who helped us chart troubled waters and bring us to this point,” as well as local elected officials, in particular Garodnick.

“None of our successes here would have been possible without his tireless dedication,” Steinberg said.

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