A hedge fund that has acquired a significant portion of the debt of Stuyvesant Town and Peter Cooper Village is now seeking to take control of them, a published report said today.
Appaloosa Management, a New Jersey-based hedge fund, filed papers in United State District Court challenging the company overseeing the two sprawling complexes, saying that the company has acted “irrationally and imprudently” and could cost debtholders hundreds of millions of dollars, the New York Times reported.
The move is expected to complicate an already sticky situation surrounding the complexes.
Earier this month, the financiers who provided the money for the purchase of the complex initiated a $3 billion forfeiture proceeding against the real estate partnership that bought it.
Bank of America, as trustee for senior lenders, brought the lawsuit in federal court against the owners of the 110 buildings that make up Stuy-Town and Peter Cooper Village.
The buildings are owned by a partnership led by Tishman Speyer Properties and BlackRock Realty. The ownership team said several weeks ago that they planned to transfer control to the lenders now that the apartments they bought for $5.4 billion in 2006 are now worth $1.8 billion.
The foreclosure action is unlikely to immediately affect the 25,000 residents of the complexes overlooking the East River, between 14th and 23rd Streets. But it marks the beginning of what promises to be a lengthy process in which the lenders will take control of the 80-acre complex and run it for an unspecified period before selling it to a new owner.
Tenants of the 110 buildings are concerned that services and maintenance could deteriorate over time.
CWCapital Asset Management LLC, which is overseeing the complex for the lenders, didn't immediately return a call Tuesday seeking comment. A spokesman for Tishman Speyer also didn't return a call.