ST-PCV Tenants Association President John Marsh speaking at a Tenants Association meeting on Saturday, with Assemblyman Brian Kavanagh, Comptroller Scott Stringer, State Senator Brad Hoylman and Council Member Dan Garodnick (Photo by Sabina Mollot)
On Thursday morning, the Stuyvesant Town-Peter Cooper Village Tenants Association announced that it was still interested in buying, and hoped that now that foreclosure proceedings have begun, CWCapital would be ready to talk business.
In an email sent out to neighbors (also available online) Tenants Association President John Marsh said, “We want to make certain that the young families just now trying to put down roots here, can carry on that tradition and that no tenant will ever again be at the mercy of a predatory landlord. The TA-Brookfield plan would deliver full recovery to the primary bondholders. Now that CW can no longer claim the place is not for sale, we hope they will take our offer seriously.”
CWCapital has so far kept its tradition of not saying anything about selling the place, other than a brief statement on Tuesday to announce the foreclosure on the property’s mezzanine debt and a sale scheduled for June 13.
Marsh also said in the email, “CWCapital will become the owner of the property on June 13, at least temporarily. Subsequently, they could hold an auction similar to what we saw in 2006, when Tishman Speyer bought the property.”
A report by Businessweek has said CW parent company Fortress was preparing a bid of $4.7 billion.
While he was running for mayor, Bill de Blasio promised he would keep ST/PCV affordable. Council Member Dan Garodnick has said he learned that a tenant-led bid would have the support of the city’s housing commissioner, Vicki Been, and the deputy mayor for economic development, Alicia Glen. In an official statement, Glen said, “Stuy Town and Peter Cooper Village are critical bulwarks of affordability for middle class families. Our housing plan emphasizes preservation, and with so many affordable units at risk in these developments, the stakes are too high to be hands-off. We are in active discussions with the lenders, Councilman Dan Garodnick and tenants in the hopes of reaching a joint approach.”
Tenants protest outside the leasing office this time last year. Their signs, along with the Tenants Association logo, read: ST-PCV A community. Not a commodity. (Photo by Sabina Mollot)
On Tuesday, CWCapital dropped the bombshell that it would be foreclosing on Stuyvesant Town’s mezzanine debt and that there would be a sale in one month. A possible bidder who’s since emerged is CW’s own parent company, Fortress, at a rumored offer of $4.7 billion.
Since neither Fortress or CW have been willing to comment on this, it’s still not official or a done deal by any means.
However, when one considers the Stuy Town special servicer’s history of communicating on this issue, rumors wind up being the most reliable thing this community’s got to go on.
As of T&V’s Wednesday press time, even a developer who’s been eager to bid on the property, Gerald Guterman, now has doubts due to the high price. Because even if tenants are eventually given the opportunity to buy, how many current residents would actually be able to afford to?
As of Tuesday, the Tenants Association maintained that it is interested, with partner Brookfield, of owning, and no longer seeing the community get passed around like meat.
But again, there’s the issue of the pricetag. Speculation of what ST/PCV could be worth is what led to the most infamous real estate flop ever, with Tishman Speyer losing its investors’ billions. Is the place really worth $4.7 billion, even in a recovering market? And if a bidder thinks so, how many more (in many cases perfectly legal) efforts will be made to price out tenants in unrenovated apartments paying lower rents? Or even gouge those already paying higher rents? There’s always more “improvements” that could be made on the tenants’ dime permanently.
The new mayor made a campaign trail promise to protect ST/PCV and other places like it from the circling of real estate buzzards like the ones who wrongly thought a complex built for the middle class was the goose that laid golden eggs in 2006. Now it is time to see if he meant it.
Stuyvesant Town leasing office (Photo by Sabina Mollot)
By Sabina Mollot
After years of remaining silent on its plans for putting Stuyvesant Town/Peter Cooper Village up for sale, CWCapital made a move on Tuesday to foreclose on the property’s mezzanine debt and then it was reported that Fortress, CW’s parent company, was preparing a $4.7 billion bid.
Neither Fortress or CWCapital would comment on that report, but in a brief written statement, the special servicer of the property, which also manages a chunk of the mezzanine or junior debt, said that a sale was scheduled to take place on June 13.
The company went on to say the action “will have no impact on our residents or on property operations.”
In response to the news, which was first reported in the New York Times, ST-PCV Tenants Association Chair Susan Steinberg said she was tired of seeing the community being treated “like a football.”
“Everything that went into building a unique residential complex for the middle class has been upended in the interest of the bottom line,” she said. “We are being punted towards a goal that isn’t ours.” She added that it was time to have tenants own the place. But that was before hearing about the potential Fortress bid.
The Tenants Association had partnered with Brookfield Asset Management in 2011 in the hopes of buying the complex and going condo. CWCapital had declined to negotiate though saying no business could be discussed until “Roberts v. Tishman Speyer” was settled. But after the settlement, there was still no chatter about bidding or a conversion.
Council Member Dan Garodnick said anyone could bid in the foreclosure, but CWCapital itself could be the winning bidder, using its unique position as debt servicer.
“They could bid billions of dollars without writing a check,” he said, “Because they are owed money here.”
He added that the move to foreclose on the mezz debt wasn’t really a surprise, since technically the property’s already been in foreclosure for years.
“It just hasn’t been formalized because there hasn’t been any action to foreclose on the lenders,” said Garodnick. Ultimately, he said what matters is that tenants’ rights are preserved.
In an official statement, the Council member also said the great bidding war of ‘06, in which potential owners were wrongly led to believe the sky was the limit on what they could charge for rents, shouldn’t be repeated.
“We cannot allow an overheated auction with wild expectations that puts a target on the back of rent-stabilized tenants.” he said. “We have seen that movie before. Tenants, and the City of New York, cannot afford to let that happen again.”
That view was shared by Assemblyman Brian Kavanagh, who said any developer with eyes on this particular prize needs to know that “This is a community that will stand up for itself.” He also said he hoped the real estate industry will have learned from Tishman Speyer’s mistakes of unrealistic expectations and disregard for the Rent Stabilization Law.
“They shouldn’t bank on being able to remove any of the tenants,” said Kavanagh. The “Roberts v. Tishman Speyer” class action suit will keep ST/PCV stabilized until the J-51 tax abatement expires in 2020. On the other hand, with one-bedroom apartments in Stuy Town going for rents that start at close to $3,000, many of the newer residents of the community still consider themselves stabilized in name only.
Developer Richard LeFrak, who bid on the property in 2006, is possibly interested in doing so again, according to the Times piece. Another developer, Gerald Guterman, who’s openly expressed a desire to turn ST/PCV co-op, said that now he’s not sure what he wants to do.
Noting that the announcement by CW only gives potential bidders a month lead time, he quipped, “Fortress makes an offer today. You think it’s because they own CW and they’re not giving outsiders the opportunity? How do you have time to (plan) unless you are familiar with what’s going on?”
As for the reported bid amount, Guterman said he isn’t sure how that sale price could make it possible for current tenants to buy if given the option. He also wasn’t sure if the price is worth it considering all the students and others living in apartments converted with pressurized walls.
“It’s still a number where I could do it but I’m not sure I want to,” he said.
Meanwhile, last August, while still a candidate for mayor, Bill de Blasio penned an op-ed for this newspaper, saying the city should make sure ST/PCV remains affordable.
“While Peter Cooper Village-Stuyvesant Town is privately owned, the city has an obligation to keep its homes affordable for hardworking New Yorkers and their families,” he said. “PCV/ST was created through the power of the city and its use of eminent domain – therefore, it’s the responsibility of the city to ensure that these homes and other affordability housing are never beyond the reach of middle class New Yorkers.”
A spokesperson for the mayor did not respond to a request for comment on this story, but Garodnick said he learned that a tenant-led bid would have the support of the city’s housing commissioner, Vicki Been, and the deputy mayor for economic development, Alicia Glen.
News of the imminent sale comes on the heels of a settlement over five MCIs between CWCapital and the Tenants Association and word that “Roberts v. Tishman Speyer” tenants will finally be paid the money they’re owed by CW.
With Tishman having paid a record-breaking price of $5.4 billion, along with $1.4 billion in mezzanine debt, there was $3 billion in senior debt (the lenders of which are represented by CW) and $1 billion in equity.
ST-PCV Tenants Association Chair Susan Steinberg, pictured at a a rally against mid-lease rent increases in May (Photo by Sabina Mollot)
By Sabina Mollot
CWCapital is expect to market Stuyvesant Town/Peter Cooper Village in the middle of this year, according to a report on Globest.com. However, the article goes on to say a sale is not expected to be completed in 2014.
CWCapital did not respond to a request for comment on the story, and has not spoken about the possibility of a sale for some time, explaining to the ST-PCV Tenants Association, a would-be buyer with partner Brookfield Asset Management, that talks could not happen until the resolution of “Roberts v. Tishman Speyer.” That could happen soon though, since according to the “Roberts” attorney for tenants, Alex Schmidt, checks for rent overpayments as a result of the class action lawsuit, could be headed tenants’ way from CW in January or February. Payments from former owner Met Life were sent out to affected tenants in late December.
However, the company could also be waiting to resolve the ongoing negotiations over five major capital improvement (MCI) rent increases with the Tenants Association. The TA said this week that talks were still ongoing over the MCIs, which were charged on tenants’ rent bills this month after being approved late last year by the state housing agency.
Meanwhile, Susan Steinberg, chair of the Tenants Association, said on Wednesday that the fact that CW could be marketing the property for a sale soon was not a new development.
“We had seen this statement in a similar report several months ago, so this does not come as a surprise,” she said. “CW doesn’t have to go far to ‘start marketing the asset,’ since all along the TA/Brookfield partnership has been ready, willing and able to start the conversation about a tenant-led purchase that would satisfy the bondholders. We would like to think such a conversation will happen before too long.”