The sale of Stuyvesant Town to the Blackstone Group and Ivanhoe Cambridge closed on Friday, but not without some heavy drama behind the scenes.
As the closing of the deal approached, SL Green Realty threatened to file a lawsuit that would block the sale, or at least hold it up. The Stuyvesant Town deal, valued at over $5.3 billion, ended up going through as planned, but not before SL Green received $10 million dollars from CWCapital Asset Management, one of Stuyvesant Town’s sellers, the New York Times reported.
The go-away-payment from CWCapital, the special servicer of Stuy-Town, largely stems from a conflict over SL Green’s One Vanderbilt development in Midtown. That project has been repeatedly challenged by the real estate investor Andrew Penson, the landlord of Grand Central Terminal. CWCapital’s parent company, Fortress Investment Group, is one of Penson’s partners in that property.
Penson earlier this year filed a $1.1 billion lawsuit against the city and SL Green, alleging the city improperly sold SL Green air rights for the massive tower, thus rendering the air rights for Grand Central all but worthless.
Penson hasn’t relented in his legal challenge to One Vanderbilt, and SL Green — which also lost $200 million when Tishman Speyer and BlackRock defaulted on Stuy-Town in 2010 — found the opportune time to strike back at CWCapital and Fortress.
“Clearly, there’s no love lost between the two groups,” one executive involved in the Stuy-Town deal told the Times. “SL Green’s threat was close enough to the closing that everyone was afraid. But it was obvious to all the parties that it had no merit. It was a nuisance and a distraction.”
The transaction for Stuy-Town — lauded by many politicians and housing advocates — will preserve about half of the 11,000-unit complex as affordable for at least 20 years. Blackstone received about $225 million in tax benefits and subsidies in return.
The Real Deal in October went behind the scenes to detail how the deal was struck between Blackstone, the city, Canadian pension fund manager Ivanhoe Cambridge and CWCapital. [NYT] – Ariel Stulberg