Value of Beekman Tower cut by 45% in new appraisal

178-unit luxury residential complex mainly leased to corporate tenants

New York /
Mar.March 17, 2021 02:45 PM
The luxury Beekman Tower in Midtown East is now worth nearly half its $146 million valuation from 2018. (Beekman Tower)

The luxury Beekman Tower in Midtown East is now worth nearly half its $146 million valuation from 2018. (Beekman Tower)

Eight months since its owner sought pandemic-related loan relief, the landmark Beekman Tower has exited special servicing after securing a payment deferral. But the value of the corporate housing-centric property has taken a big hit.

The 178-unit complex in Midtown East is now appraised at $79.9 million. That’s down 45 percent from the $146 million it was valued at in 2018. The new appraisal is from Collier’s.

The value of the Beekman is expected to stabilize at $93 million in 2023, but Trepp analysts noted that points to sustained problems in the broader market.

“The new valuations could be seen as a proxy for the return of NYC business travel and extended stay demand,” the analysts wrote of the valuation change in the data firm’s daily newsletter. “The fact that even by 2023, the valuation will be less than two-thirds of the 2018 value could be a hint as to how slow the market will be to recover.”

The property’s finances appear to justify the drastic valuation cut. According to Trepp data, the property saw net operating income of $1.6 million in 2020, less than half of the $3.9 million generated in 2019. Occupancy at the building, which was 100 percent in 2018 and 86 percent in 2019, stood at 75 percent at the end of 2020.

The 26-story Art Deco tower and adjoining 10-story apartment building received a $63 million CMBS refinancing in 2018. Last June, the loan was transferred to the special servicer “due to imminent default,” according to servicer commentary. With a debt service coverage ratio of just 0.54 for the year, the property was barely generating enough income to cover half of its interest payments.

As reported in June, loan documents — as well Russian court filings and Cypriot corporate records — indicate that the building is owned by Yakov Mikhailovich Yakubov, a retail magnate from Azerbaijan with extensive holdings in central Moscow. Yakubov could not be reached.

When Silverstein Properties sold the 143,000-square-foot property in 2015, the buyer was identified only as an “unnamed foreign investor.” Silverstein had undertaken an extensive renovation of the property in 2014, converting it from a transient hotel to a luxury residential building positioned to benefit from “demand from the United Nations building and other corporate users,” according to loan documents.

By December, Yakubov and the CMBS lender had agreed on a loan modification. Loan payments from May through September were deferred, “to be repaid in equal installments from December 2020 through February 2022,” per servicer commentary.

Following three on-time loan payments in December, January and February, the loan has been returned to the master servicer.

According to loan documents, as of 2017 the complex’s 178 units were divided into 97 corporate units, 57 long-term unfurnished units, and 27 short-term extended-stay units, with average rent of more than $5,000 a month per occupied unit.

The property manager, Reside Worldwide, has introduced new health and safety protocols in response to the pandemic. A call for comment was not immediately returned.





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