NYC commercial delinquencies drop slightly

New York /
Oct.October 08, 2010 01:45 PM

TV studio in Brooklyn among the 50 delinquent properties


A commercial condo at 110 East 42nd Street, 1262 East 14th Street in Midwood , 1775 Broadway and 40 Rector Street (credit: PropertyShark)

(Updated, Oct. 10, 7:40 a.m.) New York City had $4.74 billion worth of delinquent commercial property loans as of Oct. 1, down 0.6 percent from one month ago, when there was $4.77 billion outstanding, according to new data from Trepp compiled for The Real Deal (see the top five delinquencies below and the full 50-property list by clicking on the chart).

The decline can be largely accounted for by Joseph Moinian’s 1775 Broadway which had been more than 90 days delinquent in August but has since dropped out of Trepp’s database because the $248 million loan was sold off to a joint venture led by the Related Companies and Deutsche Bank AG. The venture is said to be angling to foreclose on the property now known as 3 Columbus Circle, and the Post has reported that Related wants to demolish the existing office tower and build a retail mall and 135-unit residential condominium in its place, whose units would sell for over $2,000 per square foot.

Meanwhile, several other high-profile properties, including a landmark building on East 42nd Street and Brooklyn’s famed JC Studios, spiraled into default, so that the city’s total outstanding commercial loan balance fell only slightly from August.

At 110 East 42nd Street, Charles Ishay’s Gotham Realty Holdings came onto the radar after missing 60 days worth of payments on its $90 million loan. Gotham acquired floors six through 18 of the commercial condo, which houses the legendary Cipriani catering hall on the lower floors, from SL Green Realty for $111.5 million in 2007. Tenants include Newmark Knight Frank and Ackman-Ziff.

According to Trepp analysts, Wells Fargo transferred the loan to special servicer LNR Property in August, which then sent a pre-negotiation letter to Gotham “for failure to replenish a letter of credit for debt service shortfalls.” The servicer had not yet received a response as of the last payment date, Sept. 15, according to Trepp.

Representatives from LNR did not immediately respond to requests for comment, but Ishay told The Real Deal that the loan has been “worked out.”

Despite Cipriani’s recent cash crunch, the financial distress of Its 42nd Street building appears to be mere coincidence. In July 2009, Ishay had filed a lien against Cipriani for failure to pay $236,282 in common charges, but it has since been settled, and Ishay said that his firm’s loan delinquency never had anything to do with Cipriani and that the family has been paying its fees at the building.

Brooklyn’s famed JC Studios, which, in its more than a century of existence has been home to television shows like “The Cosby Show” and “As the World Turns,” is also now 60 days delinquent on its a $17.44 million loan balance. JCS Realty LLC acquired the Midwood property at 1262 East 14th Street from NBC in 2000.

Philips International’s 40 Rector Street, which has long been undergoing a high-profile struggle to stay above water, made its debut on Trepp’s list last month, too. The 600,000-square-foot office building was transferred to a special servicer in June after Philips defaulted on the $80 million loan, now classified as non-performing beyond maturity.

Another newcomer to the list was a portfolio of Harlem rental apartment buildings owned by the Praedium Group, which is classified by Trepp as non-performing beyond maturity with a $26 million loan balance, as well as Queens’ Maspeth Industrial Center, which has a $22.12 million balance and is 60 days delinquent.


Click image for full list
 

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