The Real Deal New York

Chetrit, Minskoff and Moinian avoid default on $211M loan at Midtown complex

Securitized loan for 500-512 Seventh Ave. and 228 West 38th St. matured last month but borrower got extension

August 03, 2016 04:28PM
By Katherine Clarke

500 and 512 Seventh Avenue

A partnership between Joseph Chetrit, Edward Minskoff and Joseph Moinian avoided default on a $211 million loan attached to three properties at 500-512 Seventh Avenue and 228 West 38th Street, and have negotiated a 60-day extension on the loan, according to an attorney for the partners.

The loan, securitized through Wachovia Bank Commercial Mortgage Trust in 2006, has a remaining balance of $210.89 million and was nonperforming beyond maturity as of July 11, according to CMBS analytics firm Trepp.

Instead, the partners scored a last-minute extension to allow them to find a lender to refinance the debt, according to their attorney, Victor Gerstein of Gerstein, Strauss & Rinaldi. A source familiar with the situation told The Real Deal that the partners are in talks for a new loan with a New York-based bank.

The partnership acquired the ground lease on the Garment District properties in 1999 from the estate of Sol Goldman for $140 million, property records show. The three buildings total about 1.17 million square feet and house tenants including Target, which has about 100,000 square feet, and Touro College, which leases around 57,000 square feet.

The loan has performed near break-even for several years, according to Trepp.

The complex was just 85 percent occupied as of July, but interest has ticked up in recent months, with the landlords “working on several deals,” according to Trepp.

The loan default is just the latest hiccup for the landlords at the complex. Last year, Goldman’s estate threatened to terminate their ground lease, alleging a failure to address several violations, including the nonpayment of contractors and Department of Building infractions.

Chetrit filed for a temporary restraining order to stop the eviction process, and that case appears to have been resolved.

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