Massive loan on Maefield’s 20 Times Square in trouble

$900M in CMBS financing goes into special servicing

New York /
Nov.November 23, 2022 10:26 AM
Maefield Development's Mark Siffin and 20 Times Square (aka 701 Seventh Avenue) (Getty, Edition Hotels)

Maefield Development’s Mark Siffin and 20 Times Square (aka 701 Seventh Avenue) (Getty, Edition Hotels)

The nightmare at 20 Times Square is far from over.

A $900 million loan on the Maefield Development property was transferred to special servicing earlier this month, the Commercial Observer reported. The outstanding CMBS debt at the property, also known as 701 Seventh Avenue, is spread across four deals.

The borrower defaulted after $26.8 million in liens were filed against the property in connection with hotel construction and foreclosure actions, according to special servicer commentary. The loan, issued by Natixis in 2018, is set to mature in May.

The French bank made a $1.6 billion bet on the property, a 42-story tower that includes a hotel, retail and 18,000 square feet of electronic signage. The company also financed the deal for Maefield and Fortress Investment Group, who were both landlord and tenant, an apparent conflict of interest.

After Mark Siffin’s firm and Fortress defaulted on the leasehold debt, Natixis and a group of overseas investors took over the property through foreclosure. Some real estate insiders believe the 20 Times Square leasehold — on which Natixis lent $650 million — is worthless.

The lender took control of the 350,000-square-foot building at auction this year and tapped SL Green Realty to manage it. The plan is to get a hotel at the site up and running.

A decade ago, when Steven Witkoff, Maefield and Fortress purchased the 16,000-square-foot parcel, the developers envisioned a money-making machine in Times Square, complete with 74,000 square feet of retail. Marriott agreed to operate a 452-room hotel under its Edition brand.

But Maefield and Fortress, which together bought out the other investors in 2018, struggled to find tenants for the project. A joint venture between the National Football League and Cirque du Soleil leased 50,000 square feet for an interactive museum, but it lasted less than a year.

The hotel managed to open in early 2019, but it shuttered in August 2020, six months into the pandemic.

— Holden Walter-Warner





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