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 transaction, valued at over $5.3 billion, ended up going through as planned, but not without SL Green receiving $10 million dollars from CWCapital Asset Management, one of Stuy Town’s sellers, the New York Times reported.

The move stems from a conflict over SL Green’s One Vanderbilt in Midtown. That project has been repeatedly challenged by the real estate investor Andrew Penson, the landlord of Grand Central Terminal, stationed next door. 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 Penson’s own air rights for Grand Central all but worthless. Because Penson didn’t back off, SL Green threatened CWCapital at the eleventh hour of the biggest real estate deal in nearly a decade, the Times reported.

“Clearly, there’s no love lost between the two groups,” one executive involved in the 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 deal for Stuy-Town — heralded by many politicians and housing advocates — will preserve about half of the 11,000-unit complex as affordable for at least 20 years, with Blackstone receiving $225 million in benefits in return.

The Real Deal in October went behind the scenes to detail how the deal was struck between Blackstone real estate head Jonathan Gray, the city, Canadian pension fund Ivanhoe Cambridge and CWCapital. [NYT] – Ariel Stulberg

Source: SL Green given M to withdraw suit blocking Stuy Town deal: report