Area and Vantage’s Harlem loan may default, Moody’s says

New York /
Jun.June 23, 2010 03:30 PM

45 West 139th Street

A $210 million loan secured by an 1,802-unit apartment complex in Harlem owned by Vantage Properties and Area Property Partners is likely to default, a new report issued today by Moody’s Investors Service says.

The Savoy Park loan, secured by seven mostly rent-stabilized rental buildings, including 45 West 139th Street, is severely overleveraged and does not produce enough income to cover its debt service, the financial rating firm said.

“Moody’s has determined that there is a high probability that this loan may default prior to maturity,” the report says.

The property has a loan to value ratio of 155 percent, Moody’s says, meaning the debt on the building has a value that is more than 50 percent above the appraised value of the property. In addition, the revenues from the property cover only 66 percent of the debt payments.

However, the loan remains performing, indicating that an entity, likely one of the borrowers, is making additional payments to stave off default, observers said. Just $2 million remains in an interest reserve that had $30 million in 2007, Moody’s said.

Attorney General Andrew Cuomo was critical of Vantage earlier this year, announcing in January it would sue the company, and at the time accused it of using aggressive tactics to remove tenants in some of the company’s 10,000 apartment units in Queens and Manhattan. Cuomo reached a settlement with Vantage in February in which it agreed to pay $1 million and adhere to a three-year oversight program.

Affordable housing advocate Benjamin Dulchin, deputy director for Association for Neighborhood and Housing Development, speculated that the Savoy’s owners believe they will be able to move enough tenants out and raise rents to make the loan performing.

“Simply put, they are not able to put rents up as high as the underwriting anticipated,” Dulchin said. “It seems like the investors in the deal, likely [Area] are doubling down in the strategy of tenant harassment.”

Moody’s issued the data on the Savoy Park loan as part of a report on downgrades in several portions of the package of loans securitized in 2007 by Credit Suisse that includes the Harlem property.

Vantage and Area were not immediately available for comment.

 

Related Articles

arrow_forward_ios
The vacancy rate for regional and superregional malls is at an all-time high.  (Getty)
Mall vacancy rate hits all-time high
Mall vacancy rate hits all-time high
(iStock/Illustration by Kevin Rebong for The Real Deal)
Office sector to keep sinking until 2024, Moody’s predicts
Office sector to keep sinking until 2024, Moody’s predicts
More investors are factoring climate risks into their decision-making
Fire and rain and real estate: Investors take closer look at climate risk
Fire and rain and real estate: Investors take closer look at climate risk
Bvlgari at 730 5th Avenue in New York (Photo by Erin Lefevre/NurPhoto via Getty Images)
Real estate and retail shutdowns driving Tri-State slump
Real estate and retail shutdowns driving Tri-State slump
Moody’s Analytics' Keith Berry and Empirical CRE Doug Curry (Credit: LinkedIn, iStock)
Moody’s dumps stake in Doug Curry’s data firm
Moody’s dumps stake in Doug Curry’s data firm
Here’s one way to tell if a tower is in trouble
Here’s one way to tell if a tower is in trouble
Here’s one way to tell if a tower is in trouble
National Cheat Sheet: Moody’s launches CRE data portal, Trump’s childhood home hits the market … & more
National Cheat Sheet: Moody’s launches CRE data portal, Trump’s childhood home hits the market … & more
National Cheat Sheet: Moody’s launches CRE data portal, Trump’s childhood home hits the market … & more
And so it begins: Moody’s launches CRE portal to challenge CoStar’s dominance
And so it begins: Moody’s launches CRE portal to challenge CoStar’s dominance
And so it begins: Moody’s launches CRE portal to challenge CoStar’s dominance
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...