NEW YORK CITY—CWCapital Asset Management has been sued bylenders claiming they are being cheated out of hundreds of millionsof dollars in the takeover of the Stuyvesant Town and Peter CooperVillage development, according to Bloomberg News.

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CW—which has managed the 11,000-unit apartment complex onbondholders' behalf since 2010—tooktitle to the property in June by exercising a deed in lieu offoreclosure. CW canceled an auction and indicated it will put thecomplex up for sale.

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CW is charged with having engaged in “a continuing pattern ofmisconduct designed to keep CW in control” of the property and“reap an unjust windfall” of $1 billion that should go tolower-level lenders who have received nothing, according toBloomberg's reporting on the complaint.

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The filing, supplied by the lenders, couldn't immediately beverified in electronic court records by Bloomberg. Thelenders, using names such as PCVST Mezzco 4 LLC, asked a judge toaward unspecified compensatory and punitive damages. The apartmentcomplex was purchased for $5.4 billion in 2006, according to thecomplaint. The buyers, Tishman Speyer Properties LP and BlackRockInc., defaulted on a $3 billion mortgage in 2010, hurt by thefinancial crisis and thwarted plans to raise rents.

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Private-equity firm Fortress Investment Group, which owns CW,had been seeking financing for a potential $4.7 billion bid on thecomplex, a person familiar with the matter said in May.

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CWCapital and Fortress declined to respond to requests forcomment from GlobeSt.com by press time.

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Rayna Katz

Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.