By Sabina Mollot
John Sheehy, treasurer of the ST-PCV Tenants Association, recalls exactly the moment when he learned of The Blackstone Group’s interest in Stuyvesant Town.
Sheehy, who has a summer home in East Hampton, has a neighbor in Blackstone’s AJ Argarwal, a senior managing director in real estate. Though they didn’t know each other particularly well, one day they happened to see each other as Argarwal was pulling into his driveway with his wife and Sheehy asked Argarwal if he had any interest in Stuyvesant Town.
His response: “Of course,” recalled Sheehy. It wouldn’t be until a year later, though, when the two men actually met again on the subject of Stuyvesant Town.
This was when he’d arranged for Agarwal, whom he called “a pleasant fellow,” to meet with then-Council Member Dan Garodnick at his midtown office. This was in October 2014, and the Tenants Association still had hopes of going condo.
But CWCapital hadn’t yet shown any interest in that plan.
“CW was saying, ‘We’re not ready to sell, and what’s all this talk about selling?’”
Garodnick, upon reflecting on the meeting, said even though at that time tenants were hoping to get a non-eviction conversion deal with Brookfield as a partner, they were also still exploring their options.
“We were still figuring out ways to get CW’s attention,” he said. “We were able to have conversations with people who might have an interest (in working with tenants) and this fell into that category.”
Eventually, the Tenants Association and Brookfield parted ways, “amicably,” Sheehy said, with the understanding that Brookfield couldn’t wait around forever for CW to talk business. Additionally, due to shifts in the real estate market, the possibility of residents being able to afford to buy, even at insider prices, was beginning to look less and less likely.
Sheehy said tenants had hoped for figures somewhere in the ballpark of $500 per square foot at an insider price. But with the value of Stuyvesant Town/Peter Cooper Village starting to climb back up close to $5 billion – it was valued at $1.8 billion at a low point – Sheehy said this could have driven prices up to $1,600 per square foot.
Sheehy had certainly been one of the people hoping to own, as someone who’d been paying market rate since 1994. While he’d been in his Peter Cooper apartment since 1983, it was destabilized due to a couple of factors. His apartment at the time was one of seven in the complex that had originally been two units and combined into one. He has three full bedrooms as well as a fourth one that used to be a kitchen. The rent from this apartment combined with his income from the law firm where he worked, Rogers and Wells, meant he lost his stabilized status as soon as Albany allowed for luxury decontrol.
As for that meeting with Garodnick, “That went great. That got the ball running,” said Sheehy. However, CW wouldn’t make its decision to sell until the following year.
“The next thing, I guess was in October (2015), when I get a call that the city and Blackstone had a meeting and that was with Nadeem Meghji (senior managing director and head of Real Estate Americas). AJ I guess was on another deal. But Nadeem was clear that they were not going to come if the Tenants Association didn’t approve. They don’t like to come where they’re not wanted. Brookfield also had this approach.”
Blackstone, Sheehy said, had said they were involved in what was referred to as “opportunistic” acquisitions of distressed properties where they would stay longterm. “They were not interested in quick in and out.” This is ultimately what convinced the Tenants Association since no one wanted to see the property sold again just to be flipped.
After being less than impressed with other possible suitors looking to acquire the property, the TA unanimously voted to approve Blackstone’s involvement.
Another meeting was held, this time at Blackstone’s office at 399 Park Avenue with Meghji, Sheehy, two other TA members, Garodnick and CWCapital managing director Andrew MacArthur. It was at this meeting that Sheehy said he and Garodnick pushed for a five-year extension for Roberts tenants (at annual, five percent increases) upon the tax abatement program expiration in 2020. Later, Blackstone and its partner on the acquisition, Ivanhoe Cambridge, agreed.
As for the fact that the deal struck in 2015 didn’t result in a condo conversion, Sheehy’s view is: “That wasn’t anyone’s fault. It was the market that did that to us.” He also blamed the disastrous debt structure orchestrated by Tishman Speyer that later led to CWCapital doing battle with some of the lenders.
On his having gotten a conversation started with the eventual owner, Sheehy said, “I don’t mean to overstate my role. I certainly didn’t see a finder’s fee.”
Sheehy also explained the delay between Argarwal’s initial interest and a meeting taking place by saying that despite most people’s perception of the Hamptons as party central, most people with homes there don’t socialize much with neighbors. “They like their privacy,” he said.
Sheehy, retired since 1996, also worked as an assistant district attorney and an assistant counsel to Governor Nelson Rockefeller.