BH3, Capstone Land $208M Loan for Brooklyn Office Conversion

BH3 Management, a Fort Lauderdale-based real estate investment firm, and New York’s Capstone Equities have landed a $208 million construction loan from Northwind Group to convert 141 Willoughby Street, a 355,000-square-foot Class A office tower in Downtown Brooklyn, into rental apartments, according to a Northwind Group announcement and Commercial Real Estate Direct.

Why it matters

For a developer audience trying to gauge whether office-to-residential conversion actually pencils, this loan is a live data point rather than a policy talking point. The tower was completed in 2023 and never landed a single tenant, so the sponsors are converting a building with no occupied space to clear out and no legacy tenant buyouts to fund, a cleaner setup than most conversion candidates. It also matters that the sponsor is South Florida based. BH3 built its reputation buying distressed debt and assets across Miami, Fort Lauderdale and Tampa, and this deal shows that playbook exported to a New York asset that failed to lease up as built.

The numbers

Northwind Group provided the $208 million first mortgage construction loan, which retires existing debt on the property and funds the conversion. The plan converts 16 upper floors, roughly floors 8 through 23, into 239 residential rental apartments, a mix of market-rate and affordable units in studio, one-, two- and three-bedroom layouts. The bottom seven floors stay commercial space, to be rebranded as 385 Gold. “141 Willoughby is an exceptional asset in a market where demand for high-quality apartments is strong,” said Adam Falk of BH3 in the announcement. Capstone and BH3 took control of the building last year through a foreclosure, after original owner Savanna spent roughly $28 million acquiring the site in 2014 and never found a tenant for the finished tower.

What’s next

Construction on the conversion is underway following roughly a year of predevelopment work, with leasing on the 239 units to follow completion. For national developers watching whether banks and specialty lenders will still fund large conversion projects, a $208 million construction loan on a fully vacant office tower is a signal that a well-positioned, no-tenant conversion can still get financed at scale in 2026.