The Real Deal New York

Fitch expects Essex House loan to take a loss

July 28, 2011 05:22PM
By David Jones

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Jumeirah Essex House

Fitch Ratings said it expects a loan backed by the Jumeirah Essex House to take a loss as the loan is scheduled to mature in September.

The loan represents 15.2 percent of a UBS Commercial Mortgage Trust series 2007-FL1, and the property is the largest of 11 loans expected to take a loss in the pool.

The 515-room Essex House, at 160 Central Park South, underwent a $91 million conversion to partial condominium in 2007, and has struggled amid less-than-expected income, Fitch reported. Eighteen of the building’s 26 condo units have sold, six units are being held by the sponsor and for hotel inventory and two are on the market. 

The building loans were previously downgraded in 2009, at the time with a balance of $27.19 million each.

As of 2010, net operating income at the property was 81 percent less than it was underwritten for, but the figure was 68 percent above the 2009 level.

The loan originally matured in September 2009, according to Fitch, and was given two one-year extensions. The loan will reach maturity in September and will have no more extensions. The Fitch report appears to be contradicted by analysts at Real Capital Analytics, who say the property will have a third and final extension option from Berkadia Commercial Mortgage, the special servicer.

The Dubai-based owners of the Essex House have been the subject of much speculation in the New York real estate industry, as they were widely expected to sell off assets in 2009, ranging from the Knickerbocker Hotel to the W Union Square, amid fears that the high-flying U.A.E. economy had reached a zenith

The Knickerbocker was eventually sold to a group that included Ashkenazy Acquisition, Crown Acquisitions and Highgate Hotels for $180.5 million in June 2010. The property was previously handed over to Danske Bank after Isithmar, the investment arm of Dubai World, defaulted on that property‘s $300 million mortgage.

Another former member of the Dubai portfolio, the W New York – Union Square was eventually sold to Host Hotels for $185 million, after a complex series of bankruptcy filings and other legal maneuvers, following the property’s acquisition by Philadelphia-based LEM.

According to Streeteasy.com, there are 14 available units at the Essex House ranging from $899,000 for a studio up to $8.99 million for a 2,200-square-foot two-bedroom apartment. It was not immediately clear why the servicer report differed from the Streeteasy.com listings in the number of available units.

A spokesperson for the Essex House was not immediately available for comment.

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