A $140 million loan on developers Joseph Sitt and Joseph Moinian’s 245 Fifth Avenue has been transferred into special servicing because of default concerns, according to data provided to The Real Deal by analytics firm Trepp.
While the developers are still current on their loan, a default may be imminent, the data indicates. The transfer happened March 5, according to Trepp’s records.
Moinian and Sitt are the sole owners of the property following Moinian’s purchase of the tower with a fund from Goldman Sachs for $190 million in 2007 and Sitt later injected funds as part of a recapitalization of the property. The pair declined to comment on the transfer of the loan to special servicing, but confirmed that it was having some success shopping for capital as the loan nears its expiration date in May.
“We comment on acquisitions in closing process but not refinancing,” Sitt said.
Moinian bought the 307,418-square-foot office building at the height of the market pre-crash but rents at the building never performed to the heights initial investors thought it would, according to previous news reports.
The owners retained Douglas Harmon and Adam Spies of Eastdil Secured to help them source a cash infusion in the property. The brokers were not immediately available for comment.
While a nearing default is rarely a positive thing, sources said that letting the loan be transferred to a special servicer could be a strategic move.
“Sometimes it can be a good thing [for the loan to go into special servicing],” said real estate attorney Kevin O’Shea of Allen & Overy, who was not involved in the project, “because the servicer is charged with making complex decisions about the loan and entertaining modification requests. If that’s one of the [developers’] strategies — to get an extension or forbearance while trying to raise capital — it can be a good thing.”