The owner of one of Manhattan’s biggest, emptiest office buildings is considering converting the tower to residential.
InterVest Capital Partners, formerly known as Wafra Capital Partners, is in talks to turn the 1.2 million-square-foot 111 Wall Street into rentals, sources told The Real Deal.
The entirely empty building could be converted into about 1,300 units. InterVest has had talks with Nathan Berman’s Metro Loft Management, a developer experienced in conversions, to oversee the job.
One major challenge is the financing. InterVest in 2021 secured a $500 million debt package from lenders including PIMCO, Oaktree Capital Management and Petros PACE Finance to renovate the 24-story, 1960s-era building into modern, Class-A office space. InterVest would need approval from those lenders to use that funding instead for a residential conversion.
A spokesperson for InterVest, led by CEO Michael Gontar, did not immediately respond to a request for comment. A 34-page online brochure for 111 Wall Street still describes a $100 million overhaul of the office building to be completed in January 2023.
The company is trying to get creative with a building that has had its share of difficulties. InterVest spent nearly $400 million to acquire the property through two deals (buying the long-term lease on the building in 2020 and then the ground underneath the following year) with frequent collaborator Elie Schwartz’s Nightingale Properties.
The partners had grand ambitions of repositioning the dated building for higher-paying tenants, but then remote work battered the office market. Interest rates began to rise in March 2022, and last year Howard Marks’ Oaktree moved to foreclose on the property’s mezzanine loan. The foreclosure was later discontinued.
Around that time, Schwartz became embroiled in scandal. A fiduciary for crowdfunding investors who put money into a Nightingale-led deal in Atlanta revealed in July that Schwartz had misappropriated their funds and never closed on the purchase.
Schwartz has been dealing with the fallout ever since and sources say he’s no longer involved in 111 Wall Street.
Office-to-residential conversions, meanwhile, are gaining traction.
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GFP, Metro Loft’s 25 Water Street leads pack of NYC’s largest office-to-resi conversions
Just a few blocks south of 111 Wall, Berman is converting 25 Water Street into 1,300 apartments with the Gural family’s GFP Real Estate and Rockwood Capital. Berman also recently inked a deal in Midtown to transform Pfizer’s former headquarters on East 42nd Street into 1,500 rentals, which would be the largest office-to-resi conversion in history.
InterVest hired broker Samuel Lefkovitz at SBL Investors, who brought Berman into the Pfizer deal, to handle talks at 111 Wall Street.
Financial District office buildings have been targeted for conversions because their floor plates tend to be smaller than in Midtown, making it easier to design apartments that have the light and air required by the building code. A typical floor at 111 Wall Street, however, is 47,000 square feet, which would be on the large side for a New York City conversion.