Gary Barnett’s Extell Development has transferred its $375 million loan secured by the Belnord to mortgage servicer LNR Partners, which specializes in restructuring troubled debt, Fitch Ratings told Bloomberg News.
Just last week, The Real Deal reported that Extell had defaulted on the $375 million loan. Extell, then known as Intell Management and Investment, purchased the building in 1994. The purchase was made with a group of investors including Ziel Feldman of Property Markets Group, which is no longer involved. The property has since been renovated.
Extell refinanced the property in 2006, Bloomberg said, and underwriters assumed that its rent controlled units would eventually roll to market rents by April 2012. Those plans were dashed by an October 2009 ruling that prevented landlords receiving the J-51 tax abatement from increasing rents on stabilized apartments. By then Extell, based in New York, had renovated and upgraded a large number of units that are currently leasing for $15,000 to $20,000 per month.
A three-bedroom, four-bathroom apartment at the Belnord is currently listed for rent at $17,500 a month, according to the building’s website. A four-bedroom unit is listed for $18,000 a month. According to a loan servicer commentary last month compiled by Bloomberg, the ruling could force the owner to roll back the rents on those units to the stabilized levels.
The building houses ground-floor retail tenants such as as Gap, Club Monaco and CVS. [Bloomberg News]