You may have heard the news that a hedge fund named Pershing Square Capital has made a strategic move to buy some of the debt in Stuyvesant Town and Peter Cooper Village, and is now seeking to hold a foreclosure sale of the property.

We wanted to give you a sense of what happened, and what will likely occur next. We worked with Councilman Dan Garodnick and our professional team at Paul Weiss and Moelis & Co. to put this summary together quickly and comprehensively.

The quick takeaway: it is not unexpected to see maneuvers like this in a complex restructuring, and it does not change our ability to achieve the goals that we have set out. It also does not affect anyone’s rights as a rent-stabilized tenant. However, it likely means that the restructuring process will become more complicated, and even litigious. We will continue to fight to ensure that the tenants of this community are protected, no matter what scenario unfolds.

As you will recall, our property was sold in 2006 for $5.4 billion—which included a $3 billion first mortgage, $1.4 billion in what is known as “mezzanine” debt, and $1 billion in equity (Tishman Speyer and BlackRock). The property today is now considered to be worth considerably less than $5.4 billion—some estimates have said that it could be as low as $1.7 billion.

Pershing Square Capital recently bought out the portion of the debt that falls just behind the $3 billion first mortgage. This portion is known as Mezzanine 1-3, and was worth about $300 million at the outset. Pershing Square bought it, presumably at a very steep discount, with a goal of foreclosing on the property and becoming the owner—and then likely triggering a bankruptcy to restructure the debt in a way that would ensure them some value.

A notice in the New York Times Business Section yesterday indicated that Pershing Square would be holding a foreclosure auction (a UCC foreclosure) on August 25. If they were to succeed in foreclosing, they would extinguish the rights of all of the other lenders behind them—everyone from the Government of Singapore, to the Church of England, to SL Green, to of course Tishman Speyer/BlackRock.

As you may recall, CW Capital—which represents the interests of the $3 billion first mortgage—already has an order of foreclosure from a Court. That means that they have the right to foreclose, but must give 21 days notice before doing so. If CW Capital were to foreclose on behalf of the $3 billion first mortgage, they would extinguish the rights of all other lenders, including Mezzanine 1-3, which is now owned by Pershing Square.

Confusing enough? We all knew that since Tishman Speyer defaulted, this process was going to be complicated (and may even become litigious). Pershing Square’s action to try to become the owner is clear evidence of that. The one constant in this process will always be the 25,000 unified residents of this community, and addressing our needs is the only route to success.

The goals of the Tenants Association have been clear from the start: maximizing choices for tenants by giving them an opportunity to buy their units or to remain as rent-stabilized tenants if they wish; protecting the community as affordable for future generations of New Yorkers; ensuring quality maintenance services; preserving the historic configuration of the property and keeping open spaces from development; maintaining the property as a single, unified whole; and ensuring a long-term, stable ownership and capital structure.

We have made our goals clear to all applicable parties, and will continue to work to ensure that they are satisfied.

As the creditors wrangle for control, the tenants continue to be united and committed to seeing the process through to the right outcome. We will continue to demand that services be maintained, and will welcome the opportunity to partner with an entity that will satisfy the tenants’ goals. No future owner can or will be successful without the support and participation of the tenant community.

We will continue to keep you updated as we go forward.