Wells Fargo moves to foreclose on RFR’s Lever House

Aby Rosen’s firm defaulted on $98M mortgage in 2015

TRD New York /
Jan.January 20, 2017 06:12 PM

UPDATED: Thursday, Jan. 26 at 12:17 p.m.: Wells Fargo filed to foreclose on RFR Realty’s Lever House. Aby Rosen and Michael Fuchs’ company has until Jan. 27 to respond to the complaint.

In 2015, RFR defaulted on a $98 million CMBS mortgage on its leasehold on the 21-story office property at 390 Park Avenue. The company pays $6.15 million per year in rent for the tower under the terms of the 99-year ground lease, but that is set to increase to more than $20 million after 2023. “The rental reset language in the ground lease is not economically viable and has made a refinance of the loan improbable,” reads one servicing document cited by the Commercial Observer.

Wells Fargo is the trustee of the 2006 loan, which was sponsored by Credit Suisse.

A source told CO that RFR TRData LogoTINY is in talks with the ground lessor, Omnispective Management, to change the terms of the ground lease.

“This is an example of the risk associated with leasehold mortgages made at the height of the market,” the source told CO. “Not enough attention is paid to escalation clauses in ground leases and the potential for economic impairment to the property.”

Built in 1952, the 261,619-square-foot property is 87-percent leased, but leases for half the building expire by June 2020. Tenants include residential brokerage Compass. [CO]Konrad Putzier

Correction: An earlier version of this report incorrectly stated when the building was completed. It was completed in 1952.


Related Articles

arrow_forward_ios
RFR Realty's Aby Rosen and 522 Fifth Avenue (Getty; Google Maps)

Aby Rosen buys Midtown office building for $350M

Aby Rosen buys Midtown office building for $350M
Joseph Nakash, Aby Rosen and W South Beach (Getty, Google Maps)

Aby Rosen’s RFR, Nakash family battle over failed sale of W South Beach condos

Aby Rosen’s RFR, Nakash family battle over failed sale of W South Beach condos
 60 East 55th Street and RFR Realty's Aby Rosen (Getty Images, Google Maps)

RFR’s Core Club condo at Midtown tower heads to special servicing

RFR’s Core Club condo at Midtown tower heads to special servicing
Aby Rosen of RFR Realty and the Chrysler Building (Getty; iStock)

Aby Rosen is bringing back the Chrysler Building’s observation deck

Aby Rosen is bringing back the Chrysler Building’s observation deck
522 Fifth Avenue, Morgan Stanley’s James Gorman and RFR Realty’s Aby Rosen (Credit: Getty Images; Google Maps)

RFR to buy Morgan Stanley’s 522 Fifth Avenue for $350M

RFR to buy Morgan Stanley’s 522 Fifth Avenue for $350M
RFR Realty's Aby Rosen, 900 Third Avenue, and Paramount's Albert behler (Credit: Getty Images, Google Maps)

Aby Rosen in talks to buy Paramount’s East Side tower for $400M

Aby Rosen in talks to buy Paramount’s East Side tower for $400M
RFR Realty's Aby Rosen, Brookfield's Ric Clark and the Lever House at 390 Park Avenue (Credit: Getty Images and Google Maps)

Aby Rosen’s new landlords move to take control of Lever House

Aby Rosen’s new landlords move to take control of Lever House
Brookfield's Rick Clark and RFR Realty's Aby Rosen with the Lever House at 390 Park Avenue (Credit: Getty Images and Google Maps)

Aby Rosen makes it two Lever House lawsuits in two weeks

Aby Rosen makes it two Lever House lawsuits in two weeks
arrow_forward_ios

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

Loading...