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New York

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

CMBS loan is over 2 months delinquent on units that comprise private club for power brokers

 60 East 55th Street and RFR Realty's Aby Rosen (Getty Images, Google Maps)
60 East 55th Street and RFR Realty's Aby Rosen (Getty Images, Google Maps)

A favorite socializing spot for New York City’s 1 percent, the Core Club at 60 East 55th Street in Midtown has not been spared from the economic havoc wreaked by coronavirus.

A $25 million CMBS loan, which Aby Rosen’s RFR Realty secured for four commercial condo units at the base of the 41-story tower in 2016, is now more than two months behind on payments after having requested Covid-19 relief in May. The loan was recently transferred to the special servicer for “monetary default as a result of the Covid-19 pandemic,” according to Trepp.

The Core Club is the anchor tenant for the 37,000-square-foot space. It occupies about 32,000 square feet, spanning from the basement to the sixth floor on a $2.1 million-a-year lease that extends through mid-2026. The remainder of the space is leased to fast-casual restaurant Sweetgreen, on a $500,000-a-year lease through early 2029.

RFR and the Core Club did not respond to requests for comment. The servicer notes in its commentary that it has reached out to the borrower to assess next steps.

The Sweetgreen at the property is currently offering in-store ordering, although the dining room is closed, according to its website.

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Rosen’s firm constructed the tower, also known as Park Avenue Place, in 2003, and the upper floors consist of 76 residential condo units which are not collateral to the loan. The developer put the commercial units on the market in 2017 but found no buyers. A 2016 appraisal valued the property at $55 million, while brokers expected it to sell for around $65 million.

The Core Club launched in 2005, and counts Rosen — as well as Vornado Realty Trust’s Steven Roth, Blackstone Group’s Stephen Schwarzman, and top executives from various other industries — among its founding members. New members of the club must be nominated by a current member, pay a $50,000 initiation fee, and then contribute between $15,000 and $17,000 a year in renewal fees. As of 2016, the club had roughly 1,400 members.

This isn’t the first time Rosen has faced loan trouble at the property. RFR defaulted on an $18 million loan for the space in the wake of the financial crisis over a decade ago, but was eventually able to buy back the defaulted debt from the special servicer in 2010.

The proceeds of the current CMBS loan were used to return $15 million in equity to the developer, in addition to paying off prior debt, loan documents show. For the 2019 financial year, the property recorded a healthy debt service coverage ratio of 1.72.

Contact Kevin Sun at ks@therealdeal.com

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Aby RosenCmbsRFR Realty