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Nightingale faces foreclosure on 111 Wall Street

Oaktree is seeking to foreclose on troubled firm’s crown jewel

Nightingale’s Elie Schwartz, 111 Wall Street and Oaktree Capital's Howard Marks
Nightingale’s Elie Schwartz, 111 Wall Street and Oaktree Capital's Howard Marks (LinkedIn, 111 Wall, Getty)

 

Another lender is seeking to foreclose on a Nightingale office property.

Oaktree Capital Management initiated a foreclosure on Nightingale Properties’ 24-story 111 Wall Street in Lower Manhattan, the firm’s marquee asset, according to a report in Real Estate Alert. 

The property is backed by about $500 million in debt from a consortium of lenders, including SKW Funding, PIMCO, Oaktree Capital and Bain Capital. The debt package also included $89 million C-PACE financing, a program that allows landlords to pay for energy reduction improvements. 

The property was the first C-PACE deal provided in New York City history. 

Oaktree owns the mezzanine loans, allowing it to initiate a UCC foreclosure and allowing it to credit bid using its existing debt, according to Real Estate Alert.  

Nightingale took on an ambitious task when it and Wafra Capital Partners, now known as Intervest Capital Partners, bought the leasehold interest in the property in January 2020 for $175 million. Citigroup departed in 2019, leaving a 900,000-square-foot vacancy. 

Nightingale was slated to spend over $100 million to renovate the building into a modern office building. It planned to add a lobby, install a new curtain-wall facade, windows and add new amenities such as a fitness center. 

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In 2021, the firm purchased the building’s fee interest for $220 million, according to property records. 

But Nightingale’s bet on office proved disastrous. The firm is facing foreclosures on the Whale Building in Brooklyn’s Sunset Park, the Centre Square complex in Philadelphia, and a Soho office building.

And that’s the least of the company’s issues. Nightingale funded three deals through the crowdfunding platform CrowdStreet. The company raised $54 million for its planned acquisition of the 1 million-square-foot Atlanta Financial Center, which it agreed to buy for $182 million last year. 

Nightingale also raised $9 million to invest in a 110,000-square-foot office building at 1601 Washington Avenue in Miami Beach, which it bought in 2016 for $80 million. In Chicago, Nightingale raised $25 million toward its acquisition of an office building at 200 West Jackson Boulevard.

The investor entities tied to the Atlanta and Miami Beach properties were recently put into bankruptcy.

Anna Phillips, the independent manager representing investors, said last week that much of the money for the Atlanta and Miami Beach properties was transferred to Schwartz and his affiliates almost immediately after it was raised. 

“The bottom line is that the money that was raised by both entities has been misappropriated,” she said.

Nightingale did not return a request to comment. Oaktree declined to comment.

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