The Blackstone Group is partnering with Canadian investment firm Ivanhoe Cambridge to buy Stuyvesant Town and Peter Cooper Village for $5.3 billion, The Real Deal has learned.
It wasn’t immediately clear how the partnership is structured, but a source close to the transaction confirmed it to TRD. According to multiple news reports — which did not report Ivanhoe Cambridge’s involvement — a contract will be signed tomorrow. The Wall Street Journal reported that the city will provide $225 million in funding to help keep a portion of the complex affordable. Eastdil Secured’s Doug Harmon brokered the deal.
The deal will give Blackstone and Ivanhoe Cambridge control of an 11,200-apartment complex on Manhattan’s east side that epitomized the audacious and highly-leveraged dealmaking of the last real estate boom. In 2006, Tishman Speyer and its partners paid a record $5.4 billion to MetLife to acquire the complex. But after their plan to aggressively convert affordable apartments to market-rate units failed, the partners defaulted on $4.4 billion of debt in 2010 and were forced to walk away from the property. The complex is currently controlled by Fortress Investment Group subsidiary CWCapital Asset Management, which represents the creditors that foreclosed on the property after the default.
As part of the new agreement with the city, Blackstone will reserve 4,500 units at the complex for middle-income families for the next 20 years, according to the New York Times. An additional 500 units will be slated for low-income families, and Blackstone will not attempt a condominium conversion at the complex. In return for these concessions, the city will waive $77 million in mortgage recording taxes and give Blackstone a $144 million low-interest loan through the Housing Development Corporation, according to the Times. More than half the units at Stuy Town are market-rate.
Ivanhoe Cambridge, one of the world’s biggest pension-backed investment funds, is the real estate subsidiary of Quebec’s public pension-fund manager, La Caisse de Depot et Placement du Quebec, which has $200 billion in assets under management. Over the past five years, the firm has invested more than $3.8 billion in Manhattan properties, according to Real Capital Analytics — more than real estate giants like Related Companies or Brookfield Properties. In February, it dished out $2.2 billion for the office tower 3 Bryant Park in partnership with Callahan Capital Partners. The seller on that deal was Blackstone, and it appears the two firms developed a relationship.
Blackstone, America’s largest private landlord, has been making outsized bets on the New York City rental housing market in recent months, but this is by far its biggest wager. In July, it bought 25 apartment buildings from the Caiola family in partnership with Fairstead Capital for $700 million.