Bill Ackman’s hedge fund sues CWCapital for $500 Million over Stuy Town

Pershing Square Capital Management and Winthrop Realty Trust are suing CWCapital for $500 million, claiming they got bilked out of a fat profit when the special servicer foreclosed on Stuyvesant Town-Peter Cooper Village and then sold it for $5.3 billion. The suit is the latest in a number of legal challenges alleging foul play in the run-up to the blockbuster December deal CWCapital struck with the Blackstone Group and Ivanhoe Cambridge.

Understanding the lawsuit requires a quick dive into the complex debt structure that existed under the apartment complex’s old ownership.

When Tishman Speyer and BlackRock bought Stuy Town in 2006, they financed the $5.4 billion deal with a heavy load of senior and mezzanine debt. In 2010, they defaulted on their obligations and in June of that year, a federal judge green-lighted foreclosure.

Read the full story at The real Deal, by Konrad Putzier