Fortress Taps Deutsche for Loan on Sheffield
Deutsche Bank has originated a $125 million floating-rate loan on the unsold units at the Sheffield, the ill-fated Manhattan condominium-conversion property that Fortress Investment bought out of foreclosure in 2009.
The three-year loan, with two one-year extension options, is backed by the 244 units that Fortress owns in the Midtown building, which has nearly 600 units. When the mortgage closed last month, there was no existing debt on the property.
The Sheffield, built as a rental high-rise in 1978, became one of New York's highest-profile condo-conversion flops of the economic downturn. An investment group led by Kent Swig bought the building in 2005 from Rose Associates of New York for $418 million, a near-record price for a single apartment tower at the time.
The partnership lined up roughly $640 million of senior and mezzanine debt from Credit Suisse to finance the acquisition, as well as the conversion of the 845 apartments into 597 luxury condos.
But the project was hammered by the recession and became mired in lawsuits filed by tenants. With fewer than half of the units sold, the Swig team defaulted on its debt. Meanwhile, New York-based Fortress swooped in, acquiring the controlling tranche of mezzanine debt and then foreclosing. It invested less than $120 million.
Fortress installed Rose — which had sold the Sheffield to the Swig team — as the property manager and continued to renovate and sell units. Asking prices range from $700,000 for studios to $7.5 million for four-bedroom apartments.
About one-third of the unsold units are being rented. Three-quarters of those apartments are subject to rent regulations.
The 48-story building is at 322 West 57th Street, between Eighth and Ninth Avenues, one block from Columbus Circle. It features a rooftop deck, swimming pool and fitness center. Many of the units have views of Central Park.