CW, which has managed the 11,000-unit apartment complex on bondholders’ behalf since 2010, took title to the property June 3 by exercising a deed in lieu of foreclosure. CW canceled an auction and indicated it will put the complex up for sale.
CW and Wachovia engaged in “a continuing pattern of misconduct designed to keep CW in control” of the property and “reap an unjust windfall” of $1 billion that should go to lower-level lenders who have received nothing, according to the complaint filed today in New York State Supreme Court in Manhattan.
The filing, supplied by the lenders, couldn’t immediately be verified in electronic court records. The lenders, using names such as PCVST Mezzco 4 LLC, asked a judge to award unspecified compensatory and punitive damages. Wachovia Bank, named along with CW as a defendant in the suit, was acquired by San Francisco-based Wells Fargo in 2008.
The apartment complex was purchased for $5.4 billion in 2006, according to the complaint. The buyers, Tishman Speyer Properties LP and BlackRock Inc., defaulted on a $3 billion mortgage in 2010, hurt by the financial crisis and thwarted plans to raise rents.
Private-equity firm Fortress Investment Group LLC, which owns Bethesda, Md.-based CW, had been seeking financing for a potential $4.7 billion bid on the complex, a person familiar with the matter said in May.