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Who Will Control Stuyvesant Town?
Tishman Speyer has ruled out the nuclear option of bankruptcy to forestall the struggle for control of Stuyvesant Town / Peter Cooper Village. Now a real estate food fight will ensue over control of the 110-building complex, each one containing about 100 units. (WSJ incorrectly states that it is a 56-building complex.)
WSJ states that the leading contender is CW Capital, a servicer representing the investors who hold the $3 billion first mortgage on the property. This senior mortgage was in turn sliced up into CMBS tranches. CW has been in talks with the Related Cos.
Also circling the mayhem: Wilbur Ross and the LeFrak organization, one of America’s largest private real estate owners.
Lost in the article is any substantive analysis whatsoever about Uncle Sam’s role in this commercial carnage.
The article notes that Fannie Mae owns aroung $1.5 billion of the CMBS debt. Let’s dig deeper:
New York City officials are on record, pushing Fannie and Freddie to use their leverage to retain Stuyvesant Town’s character. That’s code for regulations favoring tenants. That’s also code for: ownership will not make a killing in the next millennium from Stuyvesant Town.
You don’t need nanoparticles to see Sen. Chuck Schumer’s fingerprints all over this move.
Wilbur Ross is nobody’s fool. He is not going to buy Stuy Town because it’s a marquee property. He will buy it to make a healthy return. In order to do that, CW Capital will have to take a major hit on the $3 billion.
If Ross and LeFrak are not going to pay a compelling number for the first note, what incentivizes CW Capital to walk away? If CW is a major lender and investor in the CRE arena, who is in the best position to “make it up to CW” down the road? To pay the highest price for the note?
And why would Fannie and Freddie do that?
Because Uncle Sam is controlling their purse strings, and their ongoing survival.
And why would Uncle Sam be so motivated, by way of Chuck Schumer?
20,000 votes to the candidates who get behind such a move.
The last time someone got such a solid voting bloc was Syrian President Bashar Assad.
He won 97.62% of the Syrian vote in his brilliant re-election campaign.
Apparently, the folks who counted the ballots in Damascus also did the loan underwriting on Stuyvesant Town.
Update 2/1/10: Sen. Schumer spoke at a rally of Stuyvesant Town tenants on Sunday. He declared the collapse of a developer’s plan to buy the sprawling complex “an opportunity” to keep it as a haven for the middle class.
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