NEW YORK, April 29 (Reuters) - A U.S. judge on Thursday denied a bid by the Appaloosa Investment LP hedge fund to join a lawsuit to foreclose on New York’s massive Stuyvesant Town/Peter Cooper Village apartment complexes.
Appaloosa owns about $750 million of the $3 billion of mortgages securitized into commercial mortgage-backed securities, known as CMBS bonds, on the property.
The hedge fund contended that it would suffer harm if the foreclosure were successful. It also contended that CWCapital, the special servicer overseeing the defaulted loans on the property, was not acting in its interests.
U.S. District Judge Alvin Hellerstein ruled from the bench after an hour-long hearing on Appaloosa’s motion.
“There is no proof that it is a defendant and if anything, it is more aligned with the plaintiffs,” Hellerstein said.
He said Appaloosa “is not likely to be impaired or impeded if its intervention is denied.”
When a consortium led by private equity firm Tishman Speyer bought the two complexes in 2006 for more than $5.4 billion, about $3 billion of mortgages were securitized into CMBS.
The loan was transferred into special servicing after the owner defaulted in January. The failure of Tishman’s huge acquisition became a symbol of the collapse in the U.S. commercial real estate market.
About 25,000 people live in the 11,200 apartments built to house middle-class New Yorkers. On Feb. 16, CW filed to foreclose on the property.
The case is Bank of America, N.A. et al v. PCV ST Owner LP et al, U.S. District Court, Southern District of New York, No. 10-01178. (Reporting by Grant McCool. Editing by Robert MacMillan)
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