Deals

Stuy Town reportedly worth just $2.8bn

The 80-acre New York multifamily complex sold in 2006 for $5.4bn has been valued at less than its senior mortgage, meaning potential losses for junior CMBS debt holders.

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The New York multifamily complex, Stuyvesant Town and Peter Cooper Village, has reportedly been valued at just $2.8 billion – less than the senior mortgage secured against the 80-acre properties and roughly half its 2006 sales price.

According to the Wall Street Journal, the first appraisal to be conducted on the 11,227-unit residential complex since it was taken over by special servicer CW Capital Asset Management in January could leave junior CMBS bondholders facing losses from their original investment. CW Capital was not available for comment at press time.

Stuyvesant Town
Tishman Speyer and BlackRock Realty acquired Stuy Town – as the residential complex is known – for $5.4 billion in 2006, financed with a $3 billion senior mortgage and $1.4 billion of mezzanine debt. Tishman and BlackRock handed back the keys on the property in January, when it missed a $16 million mortgage payment.

An attempt by mezzanine holders, Pershing Square Capital Management and REIT Winthrop Realty Trust, to wrest control of the property away from the senior lenders failed this August, paving the way for CW Capital to formally foreclose on Stuy Town and hold a reappraisal.

According to the Journal, investors in all the tranches of the five CMBS deals tied to Stuy Town have continued receiving interest payments despite the default, in the expectation the monies could be recovered. Interest payments to bondholders are now expected to be cut.

Several large pension and sovereign wealth funds lost hundreds of millions of dollars on the deal, including the California Public Employees Retirement System, which invested $500 million in the deal, and the Florida State Board of Administration and the California State Teachers' Retirement System, which wrote off their equity investments of $250 million and $100 million, respectively.

The Government of Singapore Investment Corporation also reportedly booked a loss on the ill-fated purchase, according to Reuters in January, after investing $100 million of equity and holding $575 million in debt positions.