* 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 their
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
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.
Brookfield would own the apartments that are not purchased and
would manage the complex.
"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," Garodnick said.
Brookfield Asset Management has $150 billion of assets under
management and has been involved in distressed complex real estate
deals, such as financing mall owner General Growth Properties'
emergence from bankruptcy, that take time to grow.
"This one's a classic" said Andrew Willis, Brookfield Asset
The company owns or controls 12,000 U.S. apartment units,
including its Fairfield portfolio which was bought during a
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 there.
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
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
A representatives from CWCapital could not be reached for