Some collectors are looking for arbitrage opportunities: They use art-backed loans to make other types of investments, including real estate, hoping to generate fatter returns. And some want access to dry powder on short notice to purchase another artwork or even a stake in a sports team.
“It’s exactly the same as why people have a mortgage against their house,” said Freya Stewart, who heads financial services at The Fine Art Group, an art adviser and boutique lender. “They are not necessarily buying another house. They are using the money to do something else.”
A spokesman for Sundheim declined to discuss the size of the credit facility backed by his art or how he uses the funds, but a person familiar with his thinking said he keeps the collateral as a working-capital line.
His collateral pool has grown 10-fold from about $30 million in 2013, according to appraisers who reviewed the list of art that backs his line. The pieces include Cy Twombly’s signature blackboard canvas “Untitled (New York City)” and “Leda and the Swan” as well as Andy Warhol’s “Most Wanted Men No. 11, John Joseph H, Jr.,” which fetched a total of more than $150 million at Christie’s and Sotheby’s auctions.
Sundheim started buying art around 2010 and opened his credit line with JPMorgan in 2013. He works with art adviser Sandy Heller, whose other clients have included Cohen and the Russian tycoons Roman Abramovich and Dmitry Rybolovlev.
The filings suggest Sundheim has become an active player at the top end of the art market, trading out of lesser works to make more significant blue-chip purchases. He owns a 1977 Willem de Kooning “Untitled XXXI,” which he bought for $21.2 million at Christie’s in 2014. The following year, he pledged a group of seven works to Sotheby’s to pay for Twombly’s “Untitled (New York City),” which sold for $70.5 million.
His Basquiats include “Dustheads” (1982), which he bought in 2016 at a steep discount from the price paid by Malaysian fugitive Jho Low three years earlier. Sundheim also owns a 1981 Basquiat self-portrait as a warrior king, brandishing a sword. That piece fetched $34.9 million in 2014, and Sundheim later purchased it in a private transaction.
The money manager has slowed his acquisitions since the launch of his hedge fund, D1 Capital Partners, in July 2018, according to a person familiar with his activities. The fund more than tripled in size since the launch to $9.3 billion in November, a rare blockbuster debut at a challenging time for the industry.
Still, Sundheim has jumped on some opportunities. In the fall of 2018, he picked up a drawing by Basquiat for $4.6 million at Phillips and a new Mark Grotjahn canvas from the artist’s solo show at Gagosian Gallery, where prices ranged from $3 million to $5 million. The two works were among 11 new pieces of collateral backing Sundheim’s credit line with JPMorgan, according to the latest filing in April.
Getting access to cheap money has become so popular that even old-school collectors are jumping into the fray.