William Ackman, a hedge fund investor by trade, who only a year ago, purchased roughly 25% of General Growth Properties, Inc. as they declared bankruptcy; has now, with Winthrop Realty, acquired a $300 million, first mezzanine loan to Stuyvesant Town/Peter Cooper Village, for $45 million.
According to Reuters, the first mezzanine loan to Stuyvesant Town is like a “second mortgage on the property, whose previous owners defaulted on a $3 billion senior mortgage earlier this year.” William Ackman now stands to potentially rule over Manhattan’s StuyTown neighborhood or, at the very least—own its luxurious apartment buildings.
Tishman Speyer, a large and successful building company in New York City, bought Stuyvesant Town and Peter Cooper Village for $5.4 billion four years ago. It was then, at the time, the “biggest single-property real estate deal” ever made. But Tishman lost it all and defaulted on its loans. Investors in the group actually lost billions. It was a large dent on the commercial real estate market.
An August 25th auction of the property’s equity featured: 56 buildings including 11,227 apartments all on 80 acres of land stretching from 14th down to third street; between 1st Avenue and the East River—a beautifully old, yet seemingly unadulterated part of Manhattan. Approximately 25,000 people live in the neighborhood.
New York City Council Member, Dan Garodnick, who represents Stuyvesant Town and Peter Cooper Village and others who have lived their lives as residents of the complexes are worried the tenant community will be forgotten.
Garodnick’s concern was later addressed by Ackman who said, “We share the Tenants’ Association’s objective to complete a non-eviction, affordable, co-op conversion of the property, which will require the restructuring of the property’s first mortgage debt.”
Though it is believed to be worth far less than the $3 billion it seeks, should the property not receive any bids in that ballpark, Ackman’s joint venture will assume the role as the equity’s new owner and take on its mortgage.
Analysts seem to feel the loan modification path is the one to follow in this scenario. The property’s mortgage was divided up amongst five commercial “mortgage-backed security deals.”