The Real Deal New York

Hedgefunder pledges art collection for real estate loan

October 18, 2011 11:27AM

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Former hedgefund manager Michael Steinhardt is pledging part of his $200 million art collection, including five paintings by Pablo Picasso and one by Jackson Pollock, as collateral for a loan from JPMorgan Chase in order to finance his latest real estate venture, Bloomberg News reported.

“We had the opportunity to get some very cheap borrowing,” Steinhardt’s son David Steinhardt told Bloomberg, saying that the loan relates to an investment in the former American Stock Exchange building at 86 Trinity Place in the Financial District, which the family company, Steinhardt Management, bought earlier this year.

Steinhardt is just one of many hedgefunders — among them Steven Cohen and Nelson Peltz — who have turned to their art collections in order to secure loans in recent months. With works by well-known artists fetching record prices at auction and borrowing costs near all-time lows, the rich see their art collections as the easiest solution, Suzanne Gyorgy, director for the art advisory and finance group at Citi Private Bank, a unit of Citigroup, told Bloomberg.

“We have seen interest in this by banks who have never done it before,” said Howard Spiegler, co-chairman of the art law group at New York-based Herrick, Feinstein. “Otherwise they are going to lose relationships because a lot of high-net-worth individuals want this kind of loan.” [Bloomberg]

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