Focus Shifts To Special Servicer As Overleveraged Landlord Of 11,000 Unit NYC Apartment Complex Readies To "Mail In The Keys"

In New York City, Crain's New York Business reports:

• In the coming weeks, control of Stuyvesant Town/Peter Cooper Village will pass from one of New York's most glamorous and powerful real estate families to a company that most people have never heard of, a major player in an industry that few even know exists. [...] Stepping into the breach will be CW Capital, a special servicer. Such companies work out troubled-property loans to salvage whatever it can for lenders.

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• CW Capital will need all of its skills to sort out the wreckage left by the implosion of the largest single residential real estate purchase in history. Lenders who have lost billions of dollars as the property's value shriveled by more than half are jockeying to reclaim what's left of their doomed investments. Meanwhile, prospective buyers are circling, tenants are demanding that services be maintained and that they get a seat in the negotiations, and politicians are vowing to protect the complex's rent-regulated status. “Figuring out the future [of Stuy Town] won't be a simple process, and it won't necessarily be a fast process,” says Dan Garodnick, a City Council member who lives in the complex.(1)

For more, see Picking up pieces at Stuyvesant Town (Special servicer will lead the lenders).

(1) According to the story, one problem facing the servicer is dealing with the affected scores of investors around the world who now find themselves trapped in a giant maze of often competing interests. Like most big real estate deals of the boom years, the debt that helped finance the $5.4 billion Stuy Town deal was reportedly diced up and sold to a variety of investors, each with different rights, depending on the risk incurred.

A touchier problem will be figuring out how much rent can be charged and what rebates are due tenants, following last year's court ruling that the former landlord had illegally jacked up rents on roughly 4,000 units, the story states (see Walls Closing In On Beleaguered Owners Of 11,000 Unit NYC Apartment Complex As State High Court Hammers Landlord For Illegal Rent Increases).

Go here for other posts on the Stuyvesant Town / Peter Cooper Village predatory equity implosion.