Gluck gets extension for debt on troubled Independence Plaza

Laurence Gluck’s Stellar Management made a deal with special servicer CW Capital Asset Management to extend the $265 million senior mortgage on Independence Plaza in Tribeca by two years, the Wall Street Journal reported, giving it time to see how a rent-stabilization lawsuit plays out. It’s the second such deal Stellar has made with creditors on the 1,332-unit complex.

Stellar partnered with Westbrook Real Estate Partners to purchase the complex at 80 North Moore Street in 2003 with the intent to raise rents by removing it from the Mitchell Lama program. The firm initially took out just a $66 million mortgage, but used more debt to make building improvements. The owners have already earned more than twice their initial debt, but the earnings are in danger because of litigation over whether the apartments were legally destabilized.

Though a federal court ruled the destabilization was legal, a state court ruled otherwise. Both decisions are being appealed. If the destabilization is deemed illegal, Stellar would have to return some of its earnings, rents would be rolled back and the building’s value would be severely reduced.

In June, Stellar gave an ownership stake to Vornado in exchange for an extension on the $185 million junior debt. [WSJ]