A vacant and distressed Downtown Brooklyn office tower is set for a partial conversion under new ownership.

A joint venture between BH3 Management and Capstone Equities acquired the 141 Willoughby St. building via foreclosure, according to deed records filed this week. The group now plans to reposition the 24-story tower into 200 apartments and 110K SF of commercial space.

Manhattan-based Savanna developed the 400K SF office tower on a speculative basis and delivered it in 2023 but never managed to attract a tenant. Only the second through seventh floors are set to remain as office space under the new plans.

“141 Willoughby Street presents a truly unique blank slate upon which to reimagine a newly developed institutional-grade asset,” BH3 principal and co-Portfolio Manager Adam Falk said in a statement.

Savanna bought the site for $28M in 2014 and secured $264M in construction financing in 2021. Pimco was the senior lender, while funds managed by CarVal Investors provided mezzanine debt.

When the developer defaulted on its debt last year, Pimco began shopping the note. Savanna and Capstone partnered in an attempt to buy the debt. Capstone ended up acquiring the debt in a partnership with BH3, The Promote first reported.

The joint venture then initiated a UCC foreclosure against the property, The Real Deal reported, and the auction was held in June. Records filed Wednesday valued the property at $86M, less than a third of the debt on the building.

Savanna did not immediately respond to Bisnow's request for comment.

Office and retail leasing at 141 Willoughby is still underway, while the residential conversion is set to begin next year. The units will be a mix of market-rate and affordable housing with studio, one-, two- and three-bedroom layouts.

In a statement, Capstone partner Avi Kollenscher said the redevelopment will “unlock the full potential” of the building.

“This is a rare opportunity to deliver a mixed-use product that aligns with how New Yorkers live and work today,” Kollenscher said.