Stuy Town Foreclosure Called Off Following Deal with Wily Bill
Matt Chaban Oct. 26, 2010, 5:08 p.m.
The Stuy Town mystery continues!
CW Capital just released a statement saying it had reached a settlement with Pershing Square and Winthrop Realty to buy the firms’ mezzanine debt from the massive housing complex. While the rogue investors, led by Pershing’s Bill Ackman, were unable to foreclose on the property themselves and seize control, CW Capital and the senior lenders it represents decided to buy out Ackman’s mezzanine loan, for which his group paid $45 million, because it could save the remaining debt holders tens or even hundreds of millions of dollars in taxes.
A CW spokesman would not say how much the servicer paid Ackman’s group or whether it was more or less than what the mezzanine loan, bought for pennies on the dollar, originally cost.
The even more surprising turn is that the senior debt holders will not be foreclosing on the property on Friday as originally planned. About the new plan, the spokesman was also mum. “Suffice it to say, there’s a lot of options,” he said. Chiefly they are for the property to remain under the control of the lenders, who could continue to flip units to market rate and milk the monthly rents, or to go the Ackman route and offer the units for sale to residents as coops. This would allow for a quicker but also lower return.
Here’s the statement:
CWCapital Asset Management LLC (“CWCAM”), on behalf of the Trusts that it represents, today settled outstanding litigation with PSW LLC (“PSW”). As part of the settlement, an entity managed by CWCAM on behalf of the Trusts acquired the Mezzanine 1-3 loans previously owned by PSW. CWCAM also cancelled the foreclosure sale that was scheduled for Friday October 29th while it focuses on ensuring a stable transition of the property and maximizing recovery of the $3.7 billion owed to the Trust which it represents.
UPDATE: The Times‘ Charles Bagli is reporting that CW is planning on going the co-op route, which could spark fighting amongst tenants as to the nature of the sale. The debate will surround whether the units should remain affordable in perpetuity or should be purchased at market rates, which would cost more but also holds out the promise of higher resale values. This of course ignores the fact that the ultimate decision lies not with the tenants but with CW Capital, which will likely be looking to maximize its profits, not the amount of affordable housing.
Then again, affordable housing being big business these days, anything is possible.