Upper East Side gallery owner hands back keys to Waterfall Mansion

Art collectors once shopped for Warhols and Picassos next to a 23-foot indoor waterfall at the famed Waterfall Mansion on the Upper East Side. Now the owner has handed back the keys to the opulent townhouse after her business hit hard times during the pandemic.

Kate Shin signed over the deed for the property at 170 East 80th Street to lender ACRES Loan Origination, property records show. The transaction, which was in lieu of foreclosure, came with a $34.4 million valuation of the 11,000 square foot house.

“Due to the prolonged legal process stemming from the pandemic, which has taken a toll emotionally and economically on both parties, I’ve opted for a settlement,” Shin said. “I prefer to cut losses now from the property and refocus on our Waterfall art business brand and gallery, supporting over hundreds of international living artists as we have done for a decade.”

ACRES, a commercial mortgage lender, sued Shin in 2021 for failing to make her loan payments on the five-story building since July 2020. Shin owed ACRES $22 million in principal, interest and late fees, according to the lawsuit, and was continuing to accrue an additional $12,000-a-day in interest.

The lawsuit alleges that Shin signed a personal guarantee on the debt in 2018 when ACRES took over the mortgage. Following an extension in January 2020, the loan matured in January 2021 and Shin failed to pay it off, the suit says.

Shin bought the townhouse in 2008 for $8.5 million. She spent more than $20 million on renovations, according to a 2021 affidavit filed in New York Supreme Court. She opened the Waterfall Mansion and Gallery in 2014 and featured the likes of Picasso, Chagall, and Warhol. She also hosted posh events for luxury brands like FENDI, Gucci and Rolls Royce, the affidavit says.

“As a result of the state of the art architectural improvements, and aesthetically beautiful and artistic renovations, finishes and appointments, ‘where art meets architecture,’ the property has been widely covered by financial and other media outlets as an extraordinary one-of-a-kind New York City property,” the affidavit says.

But the gallery fell on hard times during the pandemic, when art sales were down 80 percent, Shin claimed. She had to cut staff and move into the gallery full-time to “properly maintain, supervise and manage the property and building and its affairs,” according to the affidavit.  

Shin tried to unload the townhouse long before 2020. The house hit the market in 2015 for $39 million, and was listed again in 2021 for $34 million. The property was back on the market for $22 million last year.

Howard Morrel of Compass, who had the listing in 2021, expects the house to find a buyer if priced correctly.

“The waterfall sounds more dramatic than it is,” Morrel said. “It’s just a wall with pipes behind it. It looks beautiful but the rest of the house is very vanilla. It’s all about the number. I think that it’s a marketable house.”

An attorney for ACRES did not respond to a request for comment. Shin said she plans to announce a new location for the gallery soon.