The Real Deal New York

Riverton appraised at half the value of loan

September 17, 2009 05:02PM
By Adam Pincus

The Riverton Houses apartment complex in Harlem was reappraised at $108 million, less than half the value of its $225 million mortgage, according to a report today from commercial mortgage tracking firm Trepp.

The property has now lost 68 percent of its value compared to its appraisal value of $340 million in January 2007, according to a source.

The most recent prior appraisal put the value of the property at $52 million below the loan value, or about $173 million, Trepp data indicates.

The complex of 1,230 apartments between 135th Street and 139th Street and Fifth Avenue and the Harlem River is owned by Stellar Management which defaulted on the loan, is currently in foreclosure. Stellar purchased Riverton for $131 million in August of 2005, with a $105 million loan and $26 million in equity.

“The loan that served as the canary in the coal mine for [commercial mortgage-backed securities] is back in the news today,” Manus Clancy, Trepp managing partner, said in a report to clients.

“A new appraisal reduction of over $122 million was placed on the property earlier this week. The new number implies a potential loss of over half the value of the loan,” Clancy wrote.

Ratings agency Fitch recently downgraded the commercial real estate pool that holds the Riverton loan.

Fitch noted that only about 10 percent of the units had been converted to market-rate apartments, strangling revenue needed to pay the mortgage.

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