Developer Michael Shvo is considering dumping the remaining units at his Mandarin Oriental Residences.
Shvo and the other investors behind the project at 685 Fifth Avenue, which includes Deutsche Finance America and German pension fund Bayerische Versorgungskammer, hired Eastdil Secured to find a buyer for the unsold condos in a bulk deal, sources familiar with the matter told Bloomberg.
A bulk sale would end the developers’ four-year struggle to offload condos at the Midtown property, where fewer than one-third of its 65 units have traded so far. The developers tapped Douglas Elliman to head sales at the project, though listings for the remaining sponsor units are no longer available on Streeteasy.
News of the plans for a bulk deal comes about a year after the developers scored a $120 million inventory loan from the Northwind Group. At the time, only 15 condos had sold at the project, which had a projected sellout of $340 million.
A spokesperson for Shvo confirmed to The Real Deal that the investor group was mulling over a potential sale, following a similar strategy it employed at the Mandarin Oriental in Beverly Hills. Last year, the partnership sold 44 sponsor units at the project to Centurion Real Estate Partners after defaulting on a $200 million loan.
In a statement, Shvo’s spokesperson pointed to the partnership’s shift from focusing on residential development to office projects. “We are continuing to execute on that strategy with the potential bulk sale of remaining units at 685 5th Avenue,” the spokesperson said. Shvo, however, recently sold one of his planned mixed-use projects on Alton Road in Miami Beach to Infinity. The spokesperson added that the firm has invested $250 million in its office portfolio.
Spokespeople for Eastdil and BVK declined Bloomberg’s request for comment. A spokesperson for Deutsche Finance America did not immediately respond to the outlet’s request.
Shvo and his partners bought 685 Fifth, formerly known as the Gucci building, for $135 million in 2018, three years after Shvo’s first bid to buy the building fell through. The developers converted the office portion of the building into condos and added five floors of residences.
Since sales of the fully-furnished units launched in December 2021, some units have traded for steep discounts, including a 3,400-square-foot apartment that sold last October for $17 million — significantly less than its last asking price of $22 million.
Buyers at the Mandarin Oriental sued the development group and Shvo last year over allegations that construction on their $6 million one-bedroom condo did not line up with agreed-upon plans. A New York judge dismissed Shvo as an individual defendant in the suit, though the case is still pending.
Shvo has also been locked in a legal battle with the Core Club, a tenant at his 711 Fifth Avenue office building. The developer is in the process of trying to evict the private members club, which sued him last year for $600 million. Last month, a New York judge ruled that the Core Club owed Shvo $1 million for defaulting on a loan (Core Club is appealing the decision).
— Sheridan Wall
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