The owners of the giant 11,200-unit Manhattan apartment complex, a partnership led by Tishman Speyer and BlackRock, had just $24 million left last month in a reserve fund to pay off debt, and default was expected in a matter of weeks.

Typically, the transfer to a special servicer gives power to that entity--in this case, CWCapital--to restructure the deal, taking the power away from the owners given that they are unable to keep paying. Eventually, if the complex is sold, money would likely be returned to the main bondholders--entities such as Fannie Mae and Freddie Mac--though the complex has been given a value of about $1.8 billion, significantly less than the mortgage amount, so some bondholders would clearly take a loss.

Fitch issued a release early Friday evening saying the loan had been transferred to CWCapital:

Fitch Ratings does not expect to take any negative rating actions following the transfer of the Peter Cooper Village/Stuyvesant Town (PCV/ST) loan to special servicing today. The $3 billion A-Note was transferred to CWCapital, as special servicer, due to the sponsors' request for relief. Details of the request for relief by Tishman Speyer Properties, LP and Blackrock Realty are not immediately available.

ebrown@observer.com