The developers of the luxury condos at the Mandarin Oriental Residences on Fifth Avenue just bought themselves more time to sell units.
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Developers Shvo and Deutsche Finance America took out a $120M inventory loan at 685 Fifth Ave. from private real estate lending firm Northwind Group, the developers announced Monday. The building has 50 unsold luxury condos, Bloomberg reported.
Shvo and Deutsche Finance, which counts large German pension and insurance fund managers as equity partners, injected more cash into the building to lock down the Northwind financing.
The property, which was previously luxury fashion house Gucci’s headquarters, has 65 condos in total. Some of those units have fetched eye-watering sale prices. Late last year, one studio in the building sold for $3.8M, the New York Post reported at the time. More units priced at $25M are expected to close in the next 60 days, according to Bloomberg.
But the Mandarin Oriental has run into difficulty since sales launched. Earlier this year, a couple who purchased a unit for $6.1M sued Shvo over the building quality, Crain’s New York Business reported. Allegations included an algae infestation in the rooftop pool, construction defects and unfinished amenities.
The resident, John Goodman, claimed in a letter that was obtained by Bisnow that Shvo CEO Michael Shvo threw boisterous parties for his friends and children's parties for his family at the luxury property, causing “a direct threat to the value, reputation and integrity” of the building.
A Shvo spokesperson called Goodman's suit a “shameless” attempt to extort money from the developer.
Shvo has been caught in the center of spats over other properties. The owners of a members-only Manhattan club sued Shvo this summer, alleging fraud at 711 Fifth Ave. nearby. The suit named Germany’s largest pension fund, Bayerische Versorgungskammer, as a defendant, leading to the fund attempting to distance itself from the claims in the suit, which Shvo has said has no merit.
Shvo’s troubles aren’t limited to New York City. Earlier this month, the unsold units at Shvo's Mandarin Oriental Residences project in LA were put up for sale in bulk after its lender filed to foreclose on the property.
The firm laid off several staffers in its Miami office in August despite having two active development projects in Miami Beach.
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