Savanna Faces Foreclosure on Brooklyn Office Building

Savanna is facing foreclosure on its Downtown Brooklyn Class A office tower.

Capstone Equities has initiated a U.C.C. foreclosure for the equity interests in a Savanna-linked company that controls the 24-story high Class A office at 141 Willoughby Street, according to a notice

The non-judicial foreclosure is the latest sign of distress in the developer’s office portfolio. It also signals continuing headwinds in Downtown Brooklyn’s office market. While Manhattan Class A buildings have seen a comeback in leasing, Brooklyn offices are still struggling to lease space.

The secured party who initiated the foreclosure is CB 141 Willoughby Owner LLC, a Delaware LLC linked to Capstone.

The auction was originally set for May 7, but was pushed to June 9. It’s possible a deal could get worked out prior to the foreclosure.

Matthew Mannion of Mannion Auctions is the auctioneer. Eastdil Secured is marketing the foreclosure.

Savanna bought the site for $28 million in 2014. It secured $264 million in construction financing for the property in 2021. PIMCO provided the senior loan and CarVal Investors provided the mezzanine loan, according to the Commercial Observer. Capstone eventually purchased the loan from PIMCO, with most of the equity coming from BH3 Management, The Promote first reported.

Construction on the 400,000-square-foot office building was completed in 2022.

Savanna, like others, has faced losses on some of its office properties because of higher interest rates. Last year, it sold 360 Lexington Avenue for $65 million, a sharp discount from the $180 million Savanna spent when it purchased the 270,000-square-foot office and retail property in 2019. Savanna also faced foreclosure at 521 Fifth Avenue, a 39-story, 460,000-square-foot office tower.

At the same time, Savanna continues to buy deeply discounted office buildings. It purchased 430 West 15th Street in the Meatpacking District for $85 million last year. Savanna declined to comment on the foreclosure.