Torchlight buys $40M delinquent Fifth Avenue retail loan

Harbor Group allegedly defaulted on the financing in May

New York /
May.May 17, 2021 06:30 PM
Daniel Heflin of Torchlight and 445 Fifth Avenue. (Google Maps, LinkedIn via Heflin)

Daniel Heflin of Torchlight and 445 Fifth Avenue. (Google Maps, LinkedIn via Heflin)

New York’s much-anticipated distressed deals could finally be starting to appear.

The Canadian bank CIBC sold a delinquent $40 million loan on the retail portion of 445 Fifth Avenue to a debt fund tied to Torchlight Investors.

Harbor Group International allegedly defaulted in May 2020 on the loan that the firm used to acquire the 18,000-square-foot retail portion of the 33-story Midtown condo building.

CIBC sued the developer in September, alleging that Harbor Group missed monthly payments and failed to keep the minimum required reserve balance of $725,000.

In January, a judge appointed a temporary receiver, New York City attorney Phil Sklar, to take control of the property. The loan sale was completed in March, but was only recorded in public records late last month. Torchlight recently filed a motion to replace CIBC as the plaintiff in the lawsuit against Harbor Group.

But it could be a while before Torchlight can proceed with a foreclosure. New York state has a moratorium on Covid-related commercial evictions until Aug. 31.

When the moratorium ends, Torchlight could foreclose and take control of the property. The lender could also restructure the loan.

Nearly all of the 18,000-square-foot retail space will be occupied by Australian firm Brickworks, which signed a 10-year lease last year and had planned to open a design store this summer. The space was previously leased to jewelry store Charming Charlie, which filed for bankruptcy in 2017 and again in 2019.

Harbor Group bought the retail portion of the Fifth Avenue condo tower in 2015 from Thor Equities for $68 million.

Despite apocalyptic projections, little distress has hit New York’s commercial real estate market. At the end of 2020, distressed asset sales accounted for just 1 percent of real estate sales, according to Real Capital Analytics. Some industry pros expect this to change when the foreclosure moratorium ends.

Harbor Group, led by Jordan Slone, owns and manages 4.1 million square feet of commercial real estate and its portfolio is worth $12.7 billion, according to its website. Harbor Group did not return a request to comment.

Torchlight specializes in distressed debt workouts and has acquired over $25 billion in commercial debt investments, according to its website. The firm did not respond to a request for comment.

CIBC also did not return a request for comment.





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