CWCapital attorney Greg Cross (Photo courtesy of Venable)
By Sabina Mollot
It was the biggest bust of the last real estate boom, but a lawyer battling over Stuyvesant Town money claimed everybody won.
“Listen, everybody connected with this property is making a lot of money,” said Greg Cross, an attorney for CWCapital.
Cross was in court earlier this month defending his client’s right to a half-billion-dollar payment for services rendered during the period when CWCapital ran the complex and serviced the debt on the original $3 billion mortgage rung up by Tishman Speyer and BlackRock Realty which was sold to investors in five securitized tranches.
In October, investment giants Blackstone and Ivanhoe Cambridge agreed to buy the East Side development for $5.3 billion and signed a deal with the city to preserve 5,000 affordable apartments.
Ahead of the sale closing, the latest in a long line of lawsuits surrounding the complicated financing deals negotiated for the property drew to an end with the plaintiffs withdrawing their complaints.
On the heels of news that CWCapital, Stuyvesant Town’s controlling entity since 2010, could walk away with over a half a billion dollars in fees from the recent sale and other services, investors have filed suit to try to prevent that from happening.
Investor groups with a trust that’s a lead lender of the property’s senior debt filed the legal action last Thursday. This was after, they said, CWCapital “deflected or ignored” their questions about how the company intended to disperse the reportedly massive windfall. The plaintiffs, affiliated with hedge fund Appaloosa Management, are: Appaloosa Investment, L.P.I, Palomino Fund Ltd., Thoroughbred Fund L.P., and Thoroughbred Master Ltd.
The investors said CW has reportedly claimed it is entitled to about $566 million in default interest, based on a three percent rate on the senior loan calculated from 2010 and the fact that the property was sold for more than the senior debt. However, the plaintiffs argued, that money is not supposed to go to CWCapital, but instead to senior lenders.