Stuy Town Deal Gets Federal Funding

NEW YORK CITY—The Blackstone Group and Ivanhoe Cambridge's acquisition of Stuyvesant Town-Peter Cooper Village is being backed by Fannie Mae in the form of a $2.7 billion credit guarantee, according to the Real Deal.

The multifamily division of Wells Fargo will originate the acquisition loan and pass it on to Fannie Mae, which will then sell it off to investors in the form of commercial mortgage-backed securities stamped with its repayment guarantee. This means the federal government in effect will pay back the $5.3 billion acquisition, on top of New York City's $225 million subsidy package for the buyers.

While Fannie Mae is a company with shareholders, it is backed by the government and has a public mission to further homeownership. "Fannie Mae Multifamily and Wells Fargo are important partners in our effort to preserve the affordable heritage of Stuyvesant Town-Peter Cooper Village," says Jonathan Gray, Blackstone's head of real estate.

Fannie Mae did not disclose the interest rate on the loan, but says it carries a 10-year term. Jeffery Hayward, head of the firm's multifamily business, says the deal's closing depends on the resolution of a lawsuit by the former owner's lenders against special servicer CWCapital.

Attorney Lawrence Rolnick of Lowenstein Sandler, who represents one of the plaintiffs—Appaloosa Investment—in the suit, says the plaintiffs are not looking to block the Stuy Town sale; rather, the dispute is purely over the proceeds.

New York's senior senator Chuck Schumer previously lobbied the Federal Housing Finance Agency—which oversees Fannie Mae and Freddie Mac—to make any financing of a Stuy Town acquisition contingent on a deal with the city. Most of Fannie Mae's loans are single-family mortgages but the firm also has an active multifamily division that guarantees more than $16 billion in loans in New York City alone.

The company has a $30 billion cap on the total volume of multifamily loans it can insure each year, but it can exceed that cap for projects with an affordable housing component.

"This deal would not have been possible without Fannie Mae because there are very few financing sources in the marketplace with the expertise to execute these types of transactions," asserts Alan Wiener, head of Wells Fargo multifamily capital group.