Capstone Equities and BH3 Fund Advisors are converting 141 Willoughby Street in Downtown Brooklyn after taking control of the vacant office tower through a 2025 foreclosure. Northwind Group has provided a $208 million first mortgage construction loan for the project, according to Northwind's announcement.
A foreclosure reset the project's finances
Savanna bought the site for $28 million in 2014 and completed the 24-story, 355,000-square-foot office building in 2023, but it never secured a tenant, according to The Real Deal. The property's original debt consisted of a $181 million senior loan from PIMCO and $83 million of mezzanine debt from CarVal Investors. After the debt defaulted, Capstone and BH3 obtained control through a non-judicial UCC foreclosure in 2025.
The foreclosure transfer was valued at about $86 million, according to PincusCo, well below the property's original debt load. Capstone had purchased the defaulted PIMCO loan earlier in 2025 and then obtained a $70 million acquisition loan from Corebridge Financial for the transfer and initial work. Northwind's new financing is intended to retire existing debt, fund the residential construction and support leasing of the remaining commercial space.
The conversion depends on zoning and tax rules
A broader conversion pipeline
The 141 Willoughby project is part of a larger, though still developing, office-to-housing trend in New York City. According to the New York City Comptroller's Office, 600 commercial buildings had completed residential conversions, while 2,000 more were permitted and another 1,000 were in the pipeline. Separately, a New York City Department of City Planning analysis of Department of Buildings permit data found that approximately 7 million square feet of office space was converted to approximately 4,300 residential units between 2010 and 2020. Downtown Brooklyn's earlier planning baseline was substantially smaller: a city planning document described the area's core as having 500 housing units and 1,200 residents, alongside additional housing stock in surrounding brownstone neighborhoods, according to the New York City Department of City Planning and New York City Economic Development Corporation. That context helps explain the scale of adding 239 apartments in one building, although it does not by itself measure the neighborhood's growth since that document was prepared.
New York City's City of Yes zoning changes, adopted in December 2024, broadened the buildings eligible for residential conversion to non-residential properties existing on December 31, 1990, where housing is allowed, according to MGNY Consulting. That change replaced older eligibility rules that generally focused on buildings dating to before 1961 or 1977 in specified districts.
The project is also expected to use the state's 467-m commercial-conversion tax program. The article's cited reporting describes the program as requiring at least 25% of the apartments to be affordable, with an average income limit of 80% of area median income. The benefit is not uniformly a 35-year exemption: MGNY Consulting says the 35-year tier closed for permits pulled after June 30, 2026, so the project's permit timing will determine the applicable benefit.
Most of the tower will become housing
The plan calls for 239 rental apartments on floors 8 through 23. The lower seven floors, totaling about 110,000 square feet, will remain commercial space under the name 385 Gold and are being marketed by Newmark. Northwind's release says the commercial and residential portions will have separate entrances and elevator access rather than shared circulation.
Northwind said the building's side-core design, relatively open floorplates and high floor-to-floor heights should allow the conversion to focus primarily on interior reconfiguration. Fogarty Finger, the original architect, has returned as executive architect for the residential work, according to the release.
The loan supports a mixed-use repositioning
Rob Turner and Ethan Pond of Eastdil Secured Savills arranged the financing, according to Northwind. The lender said the commercial space is being positioned for education, health-care and government tenants, while the residential portion will add apartments to Downtown Brooklyn's mixed-use market.
The transaction shows how a recently completed but unused office building can be repositioned after a change in ownership, debt structure and intended use. The $208 million loan, apartment count, commercial layout and construction plans are based primarily on Northwind's announcement; the article does not independently verify those project-specific details through permits, filings or interviews.
