Shvo Secures $120M Inventory Loan for Mandarin Oriental

Michael Shvo picked up fresh financing the Mandarin Oriental residences, where he has a long way to go before sellout.

The Northwind Group provided a $120 million condominium inventory loan for the unsold units at 685 Fifth Avenue in Midtown, Bloomberg reported. The debt covers the 50 luxury units still awaiting a buyer.

The developers of the project, which include the eponymous firm Shvo and Deutsche Finance America, are adding cash equity as part of the financing. All parties involved could also stand to benefit from a few expected closings in the next two months, including deals for units asking more than $25 million.

As New York City’s luxury condo market slowed in the face of high interest rates, inventory loans emerged as a lifeline for developers. The debt allows developers to plow ahead on tasks, pay carrying costs and fund marketing campaigns. They can also return money to investors before a building’s units are sufficiently sold.

Only 15 of the Mandarin Oriental’s 65 units have traded hands, keeping Shvo far from a projected sellout of $343 million, according to the developer’s offering plan.

Sales launched at the project three years ago. Shvo and Turkish investor Bilgili Group paid $135 million in 2018 for the upper floors of the building, which they converted from offices into luxury apartments.

This year, a couple who purchased a one-bedroom unit sued Shvo, alleging construction defects. They complained that Shvo failed to deliver finishing touches promised for their unit that cost $6.1 million. Among the alleged errors were a lack of agreed-upon custom millwork and closets that exceeded advertised dimensions and bedroom ceiling lights.

Shvo is facing trouble on the other coast, where dozens of units at the Mandarin Oriental Residences Beverly Hills went up for bulk sale after an investor group led by the developer defaulted on a $200 million loan linked to the properties.

Around 44 condos in the luxury project at 9200 Wilshire Boulevard went up for sale on Sept. 4 after the ender filed a notice of default, Bisnow reported. The 54-unit, six-story complex was completed in May and has sold 10 condos for an average of more than $3,200 per square foot.

Ran Eliasaf’s Northwind has closed on more than $1.1 billion in loans in the United States just this year. In February, Northwind provided a $111 million condo inventory loan to the Hawthorne, a development in an affluent neighborhood of Houston.

— Holden Walter-Warner