NEW YORK CITY-In a bid to take control of Peter CooperVillage/Stuyvesant Town, a joint venture of Pershing Square CapitalManagement and Winthrop Realty Trust has bought the seniormezzanine debt on the 11,227-unit multifamily complex. The JV paid$45 million for Stuyvesant Town Mezzanine Loans 1, 2, and 3, whichhave a face value of $300 million.

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In a statement issued Monday, the JV says it has initiatedforeclosure proceedings on Stuy-Town, with the goal of becoming“the 100% controlling owner of the property.” The group hasretained the Carlton Group as exclusive advisor. Calls to Carltonfor additional comment were not returned by deadline.

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Pershing Square CEO William Ackman says in the statement thatthe JV shares the objective of the Stuy-Town tenants’ association:“to complete a non-eviction, affordable, co-op conversion of theproperty, which will require the restructuring of the property'sfirst mortgage debt.” That $3-billion first mortgage, like the mezzdebt acquired by the Pershing/Winthrop JV, is currently indefault.

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Michael L. Ashner, Winthrop’s CEO, says in a statement, “Throughthis acquisition, Winthrop and Pershing Square will be working toresolve the future of Peter Cooper Village/Stuyvesant Town. We arelooking forward to working with the Tenants Association, communityleaders, creditors and other interested parties to ensure that ourinvestment and our approach to recapitalizing Peter CooperVillage/Stuyvesant Town will bring long-term stability to theproperty and its residents. We understand the importance of thisproperty in providing housing for moderate income New Yorkers.Among our goals is the continued supply of affordable housing forits residents for years to come.”

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This past February, trustees Bank of America and the US NationalBank Assn. initiated foreclosureproceedings on Stuy-Town. In June, Judge AlvinHellerstein of US District Court in Manhattan ordered aforeclosureauction on the 80-acre complex, possibly as twoseparate parcels.

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.