Wells Fargo Heading $2.5B Stuy Town Acquisition Financing


Wells Fargo is taking the lead on roughly $2.5 billion in debt financing to Blackstone Group and Ivanhoe Cambridge for their joint purchase of Stuyvesant Town-Peter Cooper Village, two people familiar with the matter told Commercial Observer.

Blackstone and Ivanhoe signed a contract to acquire the 110-building, 11,232-unit multifamily complex from special servicer CWCapital Asset Management for $5.3 billion on Oct. 20.

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The financing, which will carry a roughly 50 percent loan-to-value ratio, will likely be provided through agency debt from Fannie Mae or Freddie Mac, if not both, the sources said on the condition of anonymity.

“We would consider participating in any refinancing of [Stuyvesant Town-Peter Cooper Village] that has the support of the city and the tenants and that preserves affordability at the property,” a spokeswoman for Freddie Mac told CO via email. A spokeswoman for Fannie Mae declined to comment.

Blackstone and Ivanhoe may otherwise securitize the debt in the commercial mortgage-backed securities market if a deal with the agencies and additional agency lenders does not work out, the sources confirmed. The massive financing package is expected to close in conjunction with the purchase before the end of the year.

In addition to the upcoming deal with Wells Fargo, Stuy Town’s incoming owners will receive a $144 million loan from the city of New York in return for maintaining 5,000 units as rent-stabilized, as previously reported.

There is roughly $3 billion in CMBS debt from the previous ownership, spread across five 2007 vintage deals, which will likely be paid off entirely as a result of the sale, according to real estate and financial data firm Trepp.

Stuy Town’s former owners Tishman Speyer and BlackRock purchased the massive rental complex, which extends between East 14th and East 23rd Streets and Avenue C and First Avenue, for $5.4 billion in 2006.

The partnership originally planned to raise rents and convert some of the units into condominiums. After the partnership defaulted on their loan payments in November 2009, CWCapital started managing the complex 2010 and acquired the deed in June 2014, according to commentary from the servicer.

Blackstone and Ivanhoe intend on holding the asset, which was originally built by MetLife as a post-war, middle-class rental community, as a long-term play.

“You think about us typically buying troubled assets, taking more risk, more of a turnaround nature,” Jonathan Gray, Blackstone’s global head of real estate, said at a press conference at Stuy Town on Oct. 20, following the news of the sale. “In this case, we’re buying a very stabilized, long-term asset.”

The announcement came shortly after Blackstone, in partnership with Fairstead Capital, purchased a 24-building multifamily portfolio in New York from the Caiola family for $690 million in September. The mortgage REIT Annaly Capital Management provided $592 million in debt for the transaction.

Representatives for Blackstone and Wells Fargo declined to comment.