Movers, yes; shakers, not so much

(Fortune) -- Hedge fund Plainfield Asset Management is abandoning its luxury offices in Greenwich, CT. Yet no subletter will pay anywhere near their $7 million annual rent.

The New York Post reports that Plainfield is moving to disaster-recovery offices in Stamford. A representative for Plainfield declined to comment on the Post story or on additional questions from Fortune. According to a person who has seen the Greenwich office, only a few employees were there and moving men were already carting away boxes.

The Greenwich office has been a sore spot for Plainfield and its investors nearly since its inception. In the summer of 2007, the firm signed a seven-year lease on 60,654 square feet for a boom-era price of $122 per square foot, or $616,000/month. The lease was signed around the time that the fund's founder Max Holmes had sent a letter to investors saying that times were going to get tough for many money managers.

To put those numbers into perspective, there are currently no subleases above $100 per square foot in downtown Greenwich, according to Jim Fagan, a realtor with Cushman and Wakefield. "Right now $122 a square foot is rich," says Fagan. "Even with the market coming back it would be yeoman's work to get that price without a bidding war between two prospective tenants."

An unnamed Plainfield employee is quoted by the Post saying that the firm can no longer afford the lease, but the move to Stamford won't save Plainfield any money, yet. As of yesterday, the fund had no one to take over the high-end offices at 100 West Putnam Avenue, according to realtors who spoke with Plainfield about the space but wished to remain anonymous.

One option for Plainfield would be to settle with building owner Antares Investment Partners, just as another beleaguered hedge fund did in 2009. That fund, Duff Capital, paid a lump sum of $15 million for the first two years of the lease, according to Teri Buhl, who first reported on troubles at 100 West Putnam last year for Dealbreaker.

A settlement would give Plainfield more time to find a tenant, but even finding an above-market renter to pay $100 per square foot would mean a $1 million annual loss for the fund, which could push it into further financial pain.

As reported earlier this year by Fortune, Plainfield was caught in a brutal squeeze at the end of 2008. The market crash had slashed the value of its assets and panicked investors wanted out. To avoid calamity, Holmes gated investors in, refusing to immediately unwind the firm's positions and return cash.

The $3.3 billion in assets under management touted in its March 2010 investor presentation is primarily invested in a series of liquidating vehicles, which will be wound down and returned to investors by the end of 2011. Those vehicles returned a net loss in 2009, according to Plainfield documents.

Plainfield's non-gated funds-- Plainfield Special Situations Master Fund (PSSMF) and Plainfield Liquid Strategies -- had just $388 million in assets, and $79 million in liabilities at the end of last year, according to balance sheet statements obtained by Fortune. That's less than the $560 million in non-gated money Plainfield had when Fortune wrote about the firm at the beginning of this year.

While reports in the New York Post and the New York Times make it seem as though Plainfield only recently decided to return money to investors trapped in its gated funds and start fresh, that has been the plan for some time. The money that it plans to return to investors is the money that it gated at the end of 2008 and beginning of 2009. According to sources who spoke with Fortune on condition of anonymity, LPs have not been informed of plans to return money on an accelerated schedule, and Plainfield still has until the end of 2011 to liquidate.

Key employees have also left the fund. An email obtained by Fortune shows that co-founder Niv Harizman has left to start his own hedge fund, Tyto Capital Partners. The New York Post reports that Plainfield Managing Director Gregg Bresner left with Harizman, and that Plainfield's chief financial Officer Robert DeSantis left this week.

Plainfield's general counsel Tom Fritsch told the Post that the firm has about 70 employees, but only about 25 of them are investment professionals, according to the firm's marketing materials. The firm had more than 150 employees at its peak.

In addition to Plainfield's real estate woes, the firm still faces legal issues. It remains under investigation by the New York District Attorney's office for predatory lending practices, and Connecticut Attorney General Richard Blumenthal is considering filing a civil suit, according to people who have recently been interviewed by his office. Plainfield has previously stated that New York's investigation is without merit. The Securities and Exchange Commission is also deciding whether to launch an investigation into the hedge fund, according to the New York Post.