RCA in the commercial property press:

Stuy Town/PCV Battle Heads to New York Supreme Court

CNBC reports: The battle for control of the massive 56-building Stuyvesant Town/Peter Cooper Village complex in Manhattan will continue in the New York Supreme Court on Thursday, September 2, 2010. Justice Richard Lowe is set to hear arguments from both the property’s current debt holder trustees (Bank of American and US Bancorp) and PSW NYC LLC (a joint venture between William Ackman’s Pershing Square Capital Management LP and Winthrop Realty Trust, which has purchased a defaulted $300.0 million mezzanine loan that was underlying the property in an attempt to capture the entire asset).

Bank of American and US Bancorp are expected to argue that the JV must pay the principal due on the property plus interest and penalties in full, which could amount to $3.66 billion, before taking control of the complex. Otherwise, a bankruptcy filing could cause these entities to endure heavy losses on their boom-year loans. According to Real Capital’s senior market analyst Ben Thypin, “senior lenders have every legal right to foreclose, but in practice they don’t want to because they have to pay millions of dollars of transfer taxes, and still need someone to buy and manage the property…it will take months, if not quarters, to resolve this.” He also believe that, “The most likely scenario is an equity foreclosure by the mezzanine lenders, after they agree with senior lenders to modify terms of the senior loan. No one could buy the property with the $3 billion loan at the current terms.”

Articles related to this topic:

 Mixed Signals in the Apartment Sector
 Facing Widespread Foreclosures, Banks Allowing Some Debtors a Free Pass
 Foreclosure Proceedings Not Deterring Stuy Town's Newest Suitors

Posted by: Nina Turner

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