Lehman Asks Judge to Approve Completion of Swig's Manhattan Condo Project
Lehman Brothers Holdings Inc. (LEHMQ) asked the judge in charge of its bankruptcy to allow for the completion of a stalled Manhattan condominium project that the firm plans to foreclose on, according to a court filing.
New York-based Lehman is seeking to invest $25 million in two adjacent properties, including 25 Broad St., a condo conversion project in lower Manhattan by developer Kent Swig. The outstanding balance on the building’s loans is about $399.6 million and the developer has defaulted on payments, according to the filing yesterday with the U.S. Bankruptcy Court in Manhattan. The second property is a development parcel at 45 Broad St. that Lehman wants to foreclose on and sell, the court filing said.
“The additional investments will help enable LBHI to maximize the value of its existing investment in the properties and, by extension, recoveries for its estate,” Lehman said in court documents.
Lehman, which has invested $39.9 million in 25 Broad since the developer defaulted, wants to complete renovations of 281 apartment units, finish demolition of the building’s south wing begun under Swig, and redesign the outdoor tenant amenity space, the company said in the filing. Development rights for the land under the demolished south wing, totaling 64,000 square feet (6,000 square meters), will be transferred to 45 Broad to make the vacant site more attractive to potential buyers.
Project Financing
Lehman refinanced Swig’s acquisition costs for 25 Broad in 2007 and loaned the developer money for the conversion of the site from an apartment building into a condo-and-retail development, according to court filings. Lehman also provided mezzanine, or secondary, financing for the project, which was to be known as The Exchange at 25 Broad, according to property listing website StreetEasy.com.
“Upon entry, you’ll experience the grandeur of our majestic lobby with its 18-foot coffered ceilings, marble-clad walls, and terrazzo floors,” according to a StreetEasy description. “Amenities include a superbly equipped health club and spa, exclusive residents’ lounge, dining room with full catering kitchen, and private theatre.”
‘Expects to Prevail’
Lehman initiated foreclosure in January 2009 through mortgages it made on 25 Broad. The company “expects to prevail” in the foreclosure action after the third quarter, it said in the filing.
The renovations are necessary to allow for the leasing of units at 25 Broad Street, which would provide cash flow to cover building operations, Lehman said in court documents. Rose Associates Inc., an owner and operator of Manhattan apartment buildings, lists 25 Broad as a “new rental building” available for lease by June of this year.
Kimberly Macleod, a spokeswoman for Lehman Brothers, did not immediately return a voice mail seeking comment. Alan Segan, a spokesman for Swig Equities LLC, declined to comment.
The case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Oshrat Carmiel in New York at ocarmiel1@bloomberg.net
To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net
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