The Real Deal New York

Swig faces $2.8 million in liens at Sheffield57

October 24, 2008 11:45AM
By David Jones

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Developer Kent Swig is facing nearly $2.8 million in mechanic’s liens filed against his controversial Sheffield57 condominium conversion, coming just weeks after Swig shut down the sales office at his other major residential building at 25 Broad Street.

Four contractors have filed a total of $2.77 million in liens against Sheffield57 since July, when legal sources say that major renovations slowed to a trickle at the building.

Standard & Poor’s issued a report in early August putting Sheffield57 on its watch list, citing concerns about the developer’s ability to refinance the project.

A Swig Equities spokesman said in a statement that “the outstanding liens are currently in the process of being paid and they will be removed shortly.”

Swig, who bought Sheffield57 for $418 million in 2005 with partners Yair Levy and Serge Hoyda, is converting the former 845-unit rental building into a 615-unit condo.

S&P said there was a remaining loan balance of $104.7 million, plus six mezzanine loans valued at $240 million that are secured by the property. The Sheffield loan was the seventh largest loan in the commercial pass-through certificate that was issued by Credit Suisse to finance these various hotels and condo projects.

The trio had received a 90-day extension from its July 9 due date so that Swig could refinance the building. It remains unclear whether Swig met that deadline or exercised an option for a one-year extension on the loan. The loans were backed by a number of commercial properties from around the country, including the Beverly Hilton and the JW Marriott Star Pass, in Tucson, Ariz.

Records filed with the New York County Clerk show the following liens filed against 322 West 57th Owner, which is led by Swig Equities:

Handy Dandy Workshop, a Brooklyn-based maker of custom cabinets, filed a lien for $1.4 million July 8. Company officials confirmed that they were a contractor, but were consulting counsel before making additional comment.

Hoffman Architects, a Hamden, Conn.-based specialist in rehabilitating building exteriors, filed one lien for $2,103 and a second lien for $27,128 on September 23. Property Shark records also show the company filed a lien against 25 Broad Street. Company officials were not immediately available for comment.

Degmor, a New York-based asbestos removal firm, filed a lien October 2 for $817,532. Company officials were not immediately available for comment.

Environmental Building Solutions, a Manhattan-based air quality consulting firm, filed a lien October 8 for $511,383. Company officials confirmed the filing, but referred additional questions to lawyers at Parisi & Leonick.

Nova Development Group, a New Brunswick, N.J.-based contractor, filed suit against 25 Broad Street, seeking payment for $764,000.

Property Shark records show that five additional contractors filed mechanic’s liens against 25 Broad since August 25. Contractors included Marjam Supply Co., of Farmingdale, N.Y., Sterling Group, Alpha Interiors, of Deer Park, N.Y., Pinnacle Contractors of NY, and Hoffman Architects. Property Shark did not list the dollar amounts.

Swig told The Real Deal earlier this month that Lehman Brothers Holdings’ September bankruptcy blocked the flow of funds for him to pay off his contractors at 25 Broad.

Barry LePatner, a New York-based construction attorney, said that the credit crunch is delaying payment for contractors across the city.

“This story has played out in past recessions where lenders refused or were unable to go forward with lending commitments on existing projects,” he said.

He warned that projects will grind to a halt and contractors in many cases will go out of business due to the lack of financing.

Attorney Luigi Rosabianca, who represents a number of buyers at 25 Broad, said that many buyers were confused as to the fate of the building, as many buyers were allowed to move into the property prior to closing on their apartments.

“The whole offer was that you get to live in your building prior to closing,” Rosabianca said.
 

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