* Brookfield to partner with tenants for a bid
* Plan calls for two ownership propositions
By Ilaina Jonas
Nov 30 The Stuyvesant Town-Peter Cooper Village
Tenants Association has selected Brookfield Asset Management
Inc <BAMa.TO as a partner to formulate a bid for the sprawling
Manhattan apartment complex that would allow tenants to buy
The tenants' association on Tuesday approved an agreement
with Brookfield to develop a bid over the coming months to
submit to CWCapital, the special servicer that represents
senior bondholders who now control the complex.
The specifics have not been worked out yet, and even a
rough price was not disclosed.
"The tenants' association and its advisers met with
countless potential partners and felt that Brookfield both
shared the goals that the tenants' association had put forth
and also had the strength and substance to get them over the
goal line," said City Councilman Daniel Garodnick, who also is
a life-long resident there.
An offer would include a plan that would enable tenants to
buy their apartments under two different ownership scenarios --
a discounted price or a deeper discounted price, each of which
would come with resale restrictions. It also would allow
current renters to remain as rent-stabilized tenants and would
seek government assistance for that.
"In my eyes that is a much stronger outcome for the tenants
and city because it protects the affordability and
sustainability of the place in a way no other plan can,"
The vast apartment complex of 56 buildings located on 80
acres on Manhattan's East Side came became a controversial
issue in 2007 when a joint venture between Tishman Speyer and
BlackRock Inc bought it for $5.4 billion from MetLife
Inc . The project had been built in two stages starting
after World War II as housing for the middle class.
The real estate firm planned to upgrade apartments as they
became available in order to raise rents to market rates. It
also planned to build or convert some units to condominiums.
Tenants said the new owners' plans would force them to move out
of the 11,200 apartment complex. About 25,000 people live
But a year later, the commercial real estate market went
into a downslide and a court ruled that bringing the apartments
to market rents violated a tax agreement with the city.
Earlier this month, a New York State appeals agreed with a
lower court ruling that said that the owners had to pay damages
to those tenants who payed the higher rents or were forced to
leave because of them. A lawyer for the tenants estimated
damages at about $215 million.
The damages could be covered by allowing those who were
affected to buy units, Garodnick said.
Regulations that protect its stabilized rent rates expire
in 10 years at which time the units will be subject to
market-rent levels, Garodnick said.
In 2010, entities set up by the joint venture to own the
complex defaulted on a $3 billion mortgage after the value of
the complex tumbled due to the financial crisis. The mortgage
had been securitized into five different pools of commercial
Garodnick estimated a market price for the apartments would
be between $600 and $700 a square foot.
The proposal is similar to one investment bank Westwood
Capital LLC, has been discussing with tenants.
"We will be continuing to watch the process as it moves
forward; we have structure and a bid that will be equally
friendly if not more friendly to the tenants," said Dan Alpert,
Westwood's managing partner.
Representatives from CWCapital and Brookfield could not be
reached for comment.