Capstone Equities has grabbed control of the six-story office-and-retail gateway at the south edge of SoHo after buying up the debt behind the project and using it to take the keys. Newly recorded deed filings this week peg the transfer at roughly $50 million for the glass-and-steel property at 606 Broadway, also listed as 140 Crosby Street. The building opened in 2019.
According to Bisnow, the deed shows a full sale price of $49.8 million, while the city register lists the transaction at $51.4 million. Records identify a Capstone affiliate as the buyer, following the firm’s earlier purchase of the loan that encumbered the building. Bisnow reports that the closing lined up with court filings and city-register entries tracking the financing moves that led to the handoff.
The debt trail
Filings from Vornado indicate that the original mortgage on the project weighed in at about $74.1 million and reached maturity on Sept. 5, 2024. When it was not repaid at that date, the loan was put into maturity default, according to Vornado. The joint venture of Madison Capital and Vornado developed the 36,000-square-foot building, and recent reporting periods showed the asset was only lightly leased leading up to the transfer. Vornado’s disclosures also note that default interest applied to the loan and that the building’s carrying value was written down as the workout played out.
Note purchase and foreclosure
The Real Deal reported that Capstone bought the $75 million note from Société Générale last year, then moved to foreclose on Madison Capital and Vornado after payments stopped. That coverage noted Capstone kept the right to pursue a deficiency judgment and that guaranties were built into the original loan package, although the foreclosure filings did not accuse guarantors of any misconduct. The move fit a now-familiar playbook for opportunistic buyers who turn discounted debt positions into ownership when negotiations over troubled loans stall out.
How the sale closed
City-register documents reviewed by Bisnow show that in March Capstone carved the building’s remaining $68.4 million mortgage into three pieces, with notes of $34 million, $21.6 million and $12.7 million. The buyer then stacked on a $5.5 million gap loan from Chicago-based Prime Finance to get the deal across the finish line. Those same filings indicate Prime Finance assumed the $34 million note and rolled it into a $39.6 million consolidated mortgage as part of the financing package. Court records show Capstone’s foreclosure case was withdrawn on May 15, one day before the sale officially closed.
Why it matters for SoHo
Madison Capital and Vornado brought the building out of the ground in 2019, according to Vornado, and the REIT’s filings show its carrying value was reduced as leasing lagged. The transfer underscores how smaller, design-forward office buildings that are not well leased have been squeezed by higher borrowing costs and softer tenant demand, leaving owners with limited options when loans come due. For SoHo, the deal hands a prominent corner asset to a new owner and gives Capstone immediate control over which office and retail tenants get a shot at the address.
Legal questions
Because the original loan came with guaranties and other enforceable provisions, Capstone still has the option to pursue claims against guarantors, if the documents allow, a possibility raised in earlier reporting on the foreclosure case. Buyers of distressed debt often face a choice between enforcing guaranties or focusing on running and repositioning the asset. Whichever route Capstone picks will signal whether it is settling in for a longer hold, planning a refresh of the property or eyeing a faster resale. For now, municipal filings and court dockets will be the key places to watch for any follow-up legal moves, as well as signs of new leasing activity or a fresh sale listing.
