After finally coming back to life as a 305-unit rental property last year, developer Kent Swig’s former mammoth office building at 25 Broad Street will hit the foreclosure auction block April 18 with an outstanding lien of $338 million, according to data from PropertyShark.com.
The auction has been a long time coming. Lehman Brothers Holdings initiated foreclosure at 25 Broad in January 2009 through mortgages it made on the building at the corner of Exchange Place in the Financial District in 2007. Lehman is foreclosing on three separate commercial mortgages issued to Swig at the building, including a senior mortgage loan of $231.68 million, a building loan mortgage of $19.67 million and a project mortgage loan of $26.66 million, all issued March 2007.
Swig fell into default at the 521,000-square-foot, 21-story property a year later, in 2008, after paying $262.5 million to buy 25 Broad in 2005. He had previously intended to transform it into a luxury condominium building.
While foreclosure proceedings were pending, the property’s receiver appointed development company LCOR and management firm Rose Associates to turn around operations at the property, which ultimately became a rental building. It was not immediately clear how many of the units are leased. Rose was not immediately available for comment.
Lehman got permission from the court to complete renovations started by Swig on 281 apartments not yet completed in order to maximize the value of the property and extend recoveries for Lehman Holdings, it’s been previously reported.
“We are proud of the renovation of 25 Broad Street and are pleased that tenants will be able to enjoy living in this magnificent historic property,” said a spokesperson for Swig Equities.
A representative for Lehman was not immediately available for comment. The financial firm emerged from its record $639 billion restructuring earlier this month and will start paying back its creditors April 17, according to news reports.
In some ways, the auction will be déjà vu. Another Swig Equities site at 45 Broad Street, slightly south of 25 Broad, hit the foreclosure auction block in November 2011 with an outstanding lien of $72.5 million in total, The Real Deal previously reported. Lehman, which has been making moves towards paying back their creditors in bankruptcy, took control of that property earlier this month for $76.79 million, according to public records.
There is no guarantee however, that Lehman will take control of the building at the foreclosure auction, said Richard Sussman, a New York-based mediation attorney and the referee of the 25 Broad auction, set to take place at 60 Centre Street.
“They do have some other corporate interest, whose attorneys have contacted Lehman’s attorneys” he said. “They’re keeping their lips sealed until the find out what Lehman’s strategy is.”