Residents of Sheffield57, perhaps the most ill-starred condo conversion in recent history, are “euphoric” that developer Kent Swig and his junior partners on Thursday formally lost control of the project they began four years ago.
“We’re going to have a number of celebrations,” said Larry Wagner, a condo owner and former Nomura CFO. That series of bashes will include a celebration in September at Kennedy’s across West 57th Street. (We’re willing to bet that never in the history of foreclosure auctions have residents been so overjoyed to have their building’s future placed firmly in the hands of a private-equity firm.)
On Thursday morning, Fortress Investment Group paid $20 million for control of the project in a foreclosure auction. Fortress has also announced it will replace Swig Equities as the managing agent with Rose Associates, the well-regarded concern led by cousins Adam and Amy Rose. As these things sometimes and oddly go in New York real estate, Rose is the very same firm that sold the Sheffield at 322 West 57th Street, then a 50-story tower of 845 rentals and zero condos, to Swig and partners in early 2005 in a $418 million deal—then the biggest residential building sale in U.S. history.
“We are extremely happy that Swig is out and somebody else is in, on so many levels,” Mr. Wagner said.
Or, as attorney Robert Braverman, who represented condo owners in the tangle of lawsuits and litigation and Albany intervention that came to characterize landlord-tenant-owner relations in the Sheffield, said of Fortress, “They’re everything that Swig was not. They are transparent and cooperative with the unit owners and tenants in the building”
To understand the root of the tenants’ feeling (and, one can only imagine, Mr. Swig’s deep relief), consider this list of events that followed the 2005 purchase:
Market-rate tenants sued Mr. Swig.
Rent-stabilized tenants sued him, alleging all manner of hazardous construction conditions.
Mr. Swig increased floor numbers by seven (in other words, the 42nd floor became the 49th, etc.), so the Sheffield could top out at the fictional 57th floor and be called Sheffield57 … branding, branding, branding! Local electeds, including Councilwoman Gale Brewer, and the Fire Department were not pleased; there were bills pitched to outlaw such practices.
When tenants and electeds protested Mr. Swig’s asbestos removal practices, he drowned them out with a marching band.
Assemblyman Richard Gottfried described Mr. Swig to The Observer as “one of the worst developers I’ve dealt with.”
The city fined Mr. Swig $800 for running an illegal hotel on the premises.
Condo owners sued Mr. Swig, then owner of about 400 unsold condos, for stiffing them on common charges. He settled.
Mr. Levy and Serge Hoyda, Mr. Swig’s other non-managing partner, sued him for misusing $50 million in building funds.
That’s all over now. Kent Swig has left the building.