The Toronto-based investment firm expects to have a sense of how receptive CWCapital Asset Management LLC, which represents holders of about $3 billion of debt on Manhattan’s biggest apartment complex, well before then, Barry Blattman, Brookfield senior managing director, told hundreds of tenants yesterday at a meeting of their association. The meeting was the first with residents since the association announced its alliance with Brookfield on Nov. 30.
“Our arrangements are such that we are shooting to make a bid to CW before April,” Blattman said. “But I’m hoping we can have an active dialogue with them between now and then.”
The tenants association has been working on buying the 80- acre complex, which runs from 14th Street and 23rd Street on Manhattan’s East Side, since owners Tishman Speyer Properties LP and BlackRock Inc. (BLK) defaulted in January of 2010. The group aims to convert most of its more than 11,000 units to condominiums, while retaining its historical affordability to middle-class residents and satisfying CWCapital’s debt holders.
Brookfield and the association plan to offer tenants three options: buy their units at a higher insider price with no restrictions on reselling, a lower price with restrictions, or remain as tenants of Brookfield. The plan depends on a large majority choosing to buy their units. They hope to attract government subsidies to help keep the rental units affordable.
Buyers, Stability
Meredith Kane, an attorney with Paul Weiss Rifkind Wharton & Garrison LLP who has been working with the association on its bid, said buyers at the higher price would face a “flip tax” that would fall over time to preserve community stability.
City Councilman Daniel Garodnick, a lifelong Stuyvesant Town and Peter Cooper Village resident who has been working with tenants on the offer, warned attendees against competitors who hope “to tempt you with a juicy offer.” He specifically denounced a rival group, Guterman-Westwood Partners LLC, which sent letters to tenants saying they would be better off with their plan to make the complex into a cooperative instead of a condominium.
“They claim they are making you the offer of a lifetime, and that the tenants association didn’t want you to know about it,” he said. “They’re like the ads on late night TV -- extremely misleading and designed to sow mistrust and doubt.”
Stores, Parking Spaces
Guterman principal Gerald Guterman, reached at his home by telephone, said his group is planning to charge residents the $3 billion to pay off CW’s debt holders, plus another $100 million to $200 million to cover closing costs -- essentially selling the complex to them at cost. His group plans to make its profit from the complex’s stores and parking spaces, he said.
Tenants would pay under his plan no more than what they paid in rent in 2005, before some rents were raised under conditions that were later ruled improper by state courts, he said. He said he planned to follow his letter by setting up a website where tenants can ask questions about his alternative.
“I’m committed to pay $3 billion and it’s real money,” Guterman said. “The No. 1 one responsibility of CW is to its bondholders.”
To contact the reporter on this story: David M. Levitt in New York at dlevitt@bloomberg.net
To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net
http://www.bloomberg.com/news/2011-12-04/brookfield-intends-to-give-cwcapital-an-offer-for-stuyvesant-town-by-april.html
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