Adam Rose of Rose Associates and Sheffield57

Six months after the building was auctioned off in a fire sale, the New York State Attorney General’s office has approved an amended offering plan for the Sheffield57 condominium near Columbus Circle in a move that could lead to a resumption of sales for the first time since May 2009. Sales at the tower at 322 West 57th Street have languished for months, after former developer Kent Swig defaulted on millions of dollars in mortgage and mezzanine loans and failed to provide an updated plan with state regulators. The building’s current owner, Fortress Investment Group, has been working with Rose Associates, the building’s recently named management firm, to complete renovations at the building so sales could resume. “The Sheffield is moving steadily towards resolution and ultimately being a success,” Adam Rose, co-president of Rose Associates, told The Real Deal. Fortress acquired Sheffield57 for $20 million, plus the assumption of debt, in a so-called mezzanine auction in August 2009. [more]

From left: The Real Deal’s top stories include best and worst deals, the profile of one-time real estate big wig Michael Shvo, and news on the Setai

The most popular stories on The Real Deal Web site from 2009, based on the number of page views, run the gamut from a collection of the best and worst deals since the crunch, to a profile of the boom-time marketing wunderkind Michael Shvo, to the breaking news that the Setai joined the number of city projects releasing buyers from their contracts.

Here are the top 10 stories of the year:

1. Finding a bottom in Brooklyn
2. The best and worst deals
3. Where in the world did Shvo go?
4. Setai condo buyers granted right to cancel contracts, get deposits back
5. New York could see a double dip in residential market
6. ‘Vornado Tornado’ gets ready to land
7. Where are buyers backing out?
8. Fortress buys Sheffield57 at auction for $20M
9.The tallest green condo shoots
10. SL Green battles Levy, Chetrit in Chelsea [more]

Developer Kent Swig won a major legal challenge this morning as a state
Supreme Court judge denied a request by investors Yair Levy and Serge
Hoyda to question him under oath and to block the auction of the
Sheffield57 condominium. As part of a blockbuster suit filed in New York state Supreme Court,
Levy and Hoyda sought to block the Aug. 6 auction of Sheffield57,
arguing that Fortress Investment Group helped orchestrate a “loan to
own” scam with Swig’s lenders that would wipe out their stake in the
building. Fortress, a Manhattan-based hedge fund, acquired about $100 million in defaulted mortgage and mezzanine loans in June, which were used to convert Sheffield57 into a luxury condominium.   Comments

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A state Supreme Court judge rejected a request to appoint a receiver to
complete the Sheffield57 condominium conversion, a decision that could
help clear the way for Fortress Investment Group to foreclose on
millions of dollars in defaulted loans and take control of the property. Judge Bernard Fried ruled that Sheffield57 investors Yair Levy and
Serge Hoyda failed to prove that the condo was in imminent
danger of being lost or destroyed, despite their lawsuit accusing
developer Kent Swig of misappropriating millions of dollars in
construction funds. “Indeed plaintiffs here have not proven that the property at issue, unsold condominium units, will be removed, lost, injured or destroyed,” Fried wrote in his decision. “At best, plaintiffs have shown that the units are likely to be sold at a discount from their actual value. This
can be remedied by the payment of money damages.” [more]

Swig trying to sell loan at Sheffield57

Developer Kent Swig is racing to complete a deal to sell the senior
mezzanine debt at the Sheffield57 condominium to a team led by Fortress
Investment Group, amid a blockbuster derivative lawsuit by his fellow
investors that could affect a final agreement. Under the proposed deal, Guggenheim Structured Real Estate would sell
its debt in the building, which includes a senior mezzanine loan of $76
million, and a junior mortgage loan of about $2 million, sources said. The sources added that Swig and Guggenheim were looking to sell the debt
at 90 cents on the dollar, while most offers were coming in at 60 to 70
cents. The buyers would then foreclose on the note, take over the property,
and pour millions of dollars into the building to complete construction
and cover delinquent payments owed to numerous contractors. “The note’s in default,” said an executive familiar with the
negotiations, “but Guggenheim doesn’t have the [additional] money to
put into the deal that the property needs.” [more]