Chinese billionaire unloads debt on struggling Greenpoint project

SKW Funding bought note on RedSky Capital’s 18 India Street

TRD New York /
Sep.September 04, 2020 02:45 PM
Ayush Kapahi, Zhang Xin and Danny Wrublin with 18 India Street (Linkedin, Getty, Google Maps, Wrublin by Chance Yeh)

Ayush Kapahi, Zhang Xin and Danny Wrublin with 18 India Street (Linkedin, Getty, Google Maps, Wrublin by Chance Yeh)

One of the largest investors eying bad real estate loans in New York has met head-on with one of Brooklyn’s biggest boom-and-bust stories.

The joint-venture between SKW Funding and private equity giant Bain Capital bought the roughly $70 million loan on RedSky Capital’s Greenpoint development site, sources told The Real Deal.

The loan for the site at 18 India Street, where RedSky had planned to build a 40-story residential tower before its development portfolio started coming apart at the seams, was described by a source familiar with the deal as sub-performing. That means the borrower is more than 30 days late on the mortgage but has not yet missed the two payments that would put the loan into the non-performing category.

The balance on the loan is just over $70 million, and SKW paid slightly below par for the note, according to the source.

SKW principals Danny Wrublin and Ayush Kapahi confirmed the purchase but declined to comment further.

The seller is Seven Valleys Capital – the family office of Chinese billionaire and Soho China founder Zhang Xin. An Eastdil Secured team of Gary Phillips, Will Silverman, Grant Frankel and Jeff Organisciak brokered the sale.

Representatives for Seven Valleys and Eastdil declined to comment.

Seven Valleys lent to RedSky in 2018 to refinance the property, where the development firm led by upstarts Ben Bernstein and Ben Stokes had planned to build a rental tower with 470 units.

But RedSky, which had assembled a $1 billion portfolio in New York and South Florida in the years following the financial crisis, soon ran into trouble. The company’s private equity partner, David Zalaznick’s JZ Capital Partners, took a huge write-down on the portfolio, and RedSky struggled with its mortgages.

The company reportedly fell behind on a large loan covering an ambitious development project in Downtown Brooklyn. And Seven Valleys moved to take over control of the 18 India site, Real Estate Alert reported in July.

RedSky put the development site up for sale in April with an asking price of $165 million, but hasn’t yet sold the site.

SKW, meanwhile, is one of the larger investors out there looking to snap up bad debt.
Wrublin’s Dalan Management multifamily firm teamed up with Kapahi’s brokerage HKS Advisors in 2014 to launch SKW. The company formed a joint venture with Bain last summer to target $500 million in bad real estate debt.

The 18 India Street loan is one of the largest purchases the vehicle has made so far.

Elsewhere, Wrublin’s Dalan Management is working on a deal to purchase one of the largest-ever Brooklyn multifamily portfolios. The deal is independent of the SKW partnership.

Contact Rich Bockmann at [email protected] or 908-415-5229


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