Appaloosa Blasts Manhattan Apt. Complex Foreclosure

Mar 1 2010 | 3:49am ET

Appaloosa Management is none too happy with the plans to foreclose on two giant Manhattan apartment complexes, and is demanding a say in the proceedings.

The $12 billion Short Hills, N.J.-based hedge fund last week asked a federal court for permission to intervene in the matter of Stuyvesant Town and Peter Cooper Village. The hedge fund, which owns bonds backed by about one-quarter of the $3 billion in mortgages on the sprawling complexes, said the management company acted “irrationally and imprudently” in pushing for foreclosure, and accused CW Capital Management of having “irreconcilable conflicts of interest.”

According to Appaloosa, CW should have pushed for bankruptcy for the joint-venture—between real estate giant Tishman Speyer Properties and BlackRock Realty—that paid $5.4 billion for Stuy Town and Peter Cooper Village in 2006. The route they chose instead, foreclosure, could force bondholders to pay transfer taxes—which amount to $100 million—twice.

What’s more, CW has a conflict as both the servicer of the mortgages and a major debtholder.

Stuy Town and Peter Cooper Village—model middle-income housing developments along the East River—are home to more than 25,000 people and cover some 25 city blocks.

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