On a Tuesday in August, Joshua Zamir’s Capstone Equities filed a lawsuit in New York State court. The target: Richard Wagman’s Madison Capital and Vornado Realty Trust, co-owners of 140 Crosby Street. Capstone alleged the borrowers defaulted on a $75 million loan that matured in September 2024. The firm had acquired that loan from Société Générale just one month earlier.
Less than a year later, Capstone owns the building outright. An affiliate purchased the 35,000-square-foot property from Madison Capital for $51.4 million, per the Commercial Observer. That is $1,469 per square foot—a steep discount from the $100 million asking price the partners floated in summer 2024.
Prime Finance provided $39.6 million in acquisition financing, consolidating the prior debt into a single lien that includes a $5.5 million gap mortgage. The structure leaves Capstone with roughly $11.8 million of equity in the deal, assuming the purchase price reflects true market value.
The property, dubbed “Gateway to Soho,” sits at the corner of Broadway and Houston Street. Vornado and Madison developed the six-story building in 2019, leasing retail space to JBL audio and Citizens Bank. By year-end 2024, the building was only 25 percent leased, per Vornado’s own report. Vornado owned half the property.
The borrowers took out the $75 million loan in 2019 with Société Générale and signed a bad boy guarantee. That guarantee makes them liable for losses if they commit prohibited acts like fraud or misappropriation. Capstone’s lawsuit did not allege any violations of those carveouts, though it reserved the right to enforce the guarantee. The threat remains live.
Capstone’s playbook is now familiar. In 2023, the firm took over the Whale Building in Sunset Park after acquiring the debt and foreclosing on Elie Schwartz’s Nightingale Properties. Last summer, it repeated the maneuver at Savana’s 141 Willoughby office tower in Downtown Brooklyn. In each case, Capstone bought the non-performing loan, sued, and ended up with the asset.
The strategy exploits a gap in the capital stack. When a loan matures and the borrower cannot refinance—because the property’s value has fallen or leasing is weak—the lender faces a choice: extend, restructure, or sell the note at a discount. Capstone buys the note, then forecloses. The original borrower loses the asset, and Capstone acquires it at a price reflecting the distressed loan, not the peak valuation.
At 140 Crosby Street, the math is brutal for the prior owners. The $75 million loan was originated at a value likely near $100 million. Capstone’s $51.4 million purchase implies a 49 percent write-down on the debt. The $39.6 million Prime Finance loan is 77 percent of the new purchase price, leaving Capstone with a modest equity check and a clean title.
The deal reveals how aggressive loan-to-own strategies are reshaping Soho office values. The neighborhood’s office stock, once a darling of institutional capital, now trades at discounts that reflect structural vacancy and higher interest rates. Capstone’s cost basis of $1,469 per square foot is roughly half the $3,000-plus per foot that similar buildings commanded in 2019.
Prime Finance’s role is instructive. The lender provided acquisition financing at a 77 percent LTV, a level that would have been unthinkable for a 25 percent leased office asset in a rising rate environment. But Prime is not underwriting the property’s current cash flow. It is underwriting Capstone’s ability to lease up the building and refinance at a higher value. That is patient capital with a specific thesis.
For Vornado and Madison Capital, the outcome is a loss of control and a potential bad boy guarantee claim. Vornado’s spokesperson declined to comment. Madison Capital did not respond. The borrowers’ silence suggests they are focused on limiting further liability, not contesting the foreclosure.
Capstone’s acquisition of 140 Crosby Street is a case study in the new capital hierarchy. Cheap debt is gone. Speed and leverage no longer win. The winners are firms that can source distressed loans, navigate litigation, and hold assets through a leasing cycle. Zamir’s firm has done it three times in three years. That is a pattern, not a coincidence.