UPDATED Oct. 21, 2021, 4:47 p.m.: Trinity Place Holdings is racing to close an inventory loan for its trophy Financial District condo tower before forbearance agreements with its lenders expire.
Sources familiar with the project said the developer is set to close this week on a loan from an undisclosed lender that would refinance existing debt on the 40-story condo at 77 Greenwich Street, but the scramble underscores problems that have been brewing at the project for years
Construction delays, slow sales and a lack of cash on hand have put the project’s senior and mezzanine loans in default, filings with U.S. Securities and Exchange Commission show. The mixed-use tower designed by FXFOWLE includes 90 luxury condos, an elementary school and over 7,500 square feet of retail space.
The project’s senior lender, Massachusetts Mutual Life Insurance, provided $190 million in construction financing in 2017 and, though the loans are slated to mature in January and have a one-year extension option, the lender has entered into forbearance agreements with Trinity three times. The first forbearance agreement was signed in Sept. 2019 after Trinity defaulted on the loan’s $15 million liquidity requirement.
The project hit another snag a few months later, when construction was halted due to a government-ordered shutdown in the early days of the pandemic. Work on the site didn’t fully restart until June 2020 and the delay compromised the project’s sales efforts, the developer told investors.
In December, MassMutual agreed to modify the terms of its loans to extend deadlines for construction and sales into 2021 with construction slated to wrap by Nov. 30 and closings on units to begin in the third quarter.
That same month, Trinity secured a $7.5 million mezzanine loan from Davidson Kempner Capital Management. Proceeds of the loan were used to pay down $8 million of senior debt and fund interest reserves required under the senior loan terms.
Early this year, as the new development market was heating up across the city, Trinity tried to jump start the project’s sales by switching brokers. It replaced new development firm The Marketing Directors with celebrity broker Ryan Serhant’s firm. At the time, the outgoing firm had noted the challenge of selling the condos while construction was still underway. Serhant took over in April and rebranded the tower with a French-inspired moniker, “Jolie.”
Serhant declined to comment on how many contracts his firm has secured, but said interest from buyers was “robust.” In March, Trinity reported 16 units in contract to investors, SEC filings show. Prices range from $1,538 to $3,057 per square foot and closings began earlier this month.
“The unit sizes have been really well received. The finishes are beautiful,” said Serhant. “As the building gets more complete, we see higher and higher deal flow.”
But the efforts still fell short of lenders’ standards. By June, Trinity was once again in default of both its senior and mezzanine loans, SEC filings show, due to the developer’s failure to meet certain sales and construction deadlines, including the delivery of a new subway entrance pursuant to an agreement with the MTA. The developer had also failed to maintain $8 million in cash per the loan’s modified liquidity requirement and make a $2.5 million deposit to an interest reserve.
A spokesperson for MassMutual subsidiary Barings LLC said the lender is not currently pursuing foreclosure proceedings at 77 Greenwich.
“Massachusetts Mutual Life Insurance Company, acting through its investment adviser, Barings LLC, has and continues to work with its borrowers who have been impacted by the COVID-19 pandemic,” said Barings’ chief communication officer Cheryl Krauss in a statement provided after this article was originally published.
Instead of curing the defaults, Trinity is focused on securing fresh financing to retire the existing debt. The effort began in April when the company said it was fielding unsolicited proposals from “several well-known institutional real estate lenders.” By June, Trinity told investors it had signed a term sheet with an undisclosed lender. The same month, MassMutual and Davidson Kempner both signed forbearance agreements giving the developer until Oct. 1 to close the deal. After Trinity missed the deadline, the agreements were extended through Oct. 31.
As the developer hurried to close, it secured a $10.5 million loan from its joint venture partner on The Berkley, a luxury apartment building in Williamsburg. The one-year loan has an interest rate of 10 percent with two 12-month extensions. Its proceeds will be used to refinance the debt at 77 Greenwich, Trinity’s SEC filings show. Trinity was also in talks with Davidson Kempner to provide additional financing, but no deal was reported.
Trinity, MassMutual and Davidson Kempner did not respond to requests for comment.
Trinity is publicly traded on the New York Stock Exchange and has a market cap of just under $72 million. 77 Greenwich is its largest asset. Other buildings include a 50 percent stake in The Berkley, a 10 percent stake in another Williamsburg rental at 250 North 10th Street and a retail property in Paramus, New Jersey. The firm also owns intellectual property rights to a collection of consumer brands dating back to its corporate predecessor, discount clothing chain Syms. 77 Greenwich is located on the site of a shuttered Syms store.
Trinity has been led by Matthew Messinger, an alum of developer Forest City Ratner Companies, since 2016. In August, the company sought to sell $10 million worth of its shares to raise cash. Its shares opened at $2.20 Wednesday morning, up 12 percent since the start of the month. Its largest shareholders are value investors Third Avenue Management and Michael Price.
This story has been updated with a statement from MassMutual subsidiary Barings LLC.