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Dumont Building defaults on $103M loan

Owner GFP Real Estate negotiating for extension

GFP’s Jeff Gural (left) and Brian Steinwurtzel with 515 Madison Avenue (GFP)
GFP’s Jeff Gural (left) and Brian Steinwurtzel with 515 Madison Avenue (GFP)
By
Feb 5, 2023, 8:00 AM

UPDATED Feb. 9, 4:30 p.m. ET

Just days after Scott Rechler confirmed that RXR will hand back two of his buildings to lenders, a $103 million loan on the DuMont Building is in default, Crain’s New York reported, citing a Fitch report.

A special servicer is negotiating with building owner GFP Real Estate for an extension, which matured at the end of January, the outlet reported. GFP may have to hand over the keys if a deal isn’t worked out.

“We have agreed to terms with our lender and are finalizing documentation to extend the existing loan,” Jeff Gural, chairman and principal of GFP, said in a statement. “We are quite confident that we will be able to repay the loan during this extension.”

With the office market still struggling to bounce back, the Dumont Building is the latest to feel the crunch. At the end of 2022, the building at 515 Madison Avenue had a nearly 84 percent occupancy rate, which is expected to drop to 75 percent when tenant Memorial Sloan Kettering leaves at the end of its lease, the outlet reported. Its biggest tenant is Jay Suites, which occupies 14 percent of the total space, followed by Memorial Sloan Kettering at 7 percent and Sheldon A. Sinett with nearly 3 percent, according to Fitch. ​​

The era of hybrid work has taken its toll on office markets throughout the country. In addition to plans to surrender two of his buildings in Brooklyn, Rechler likened 10 percent of RXR’s portfolio to Kodak film, implying that it’s nearly obsolete.

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“In my opinion, we can’t do anything with some of them,” he told FT.

Meanwhile, Vornado Realty Trust last week wrote down $600 million of its portfolio as it reckons with the changing market.

The seven buildings involved in the writedown were valued at $5.6 billion four years ago. Today, they are worth $4 billion, representing a 30 percent drop.

It’s another piece of bad news for Vornado, which also cut its dividend by nearly 30 percent as a result of the economic downturn and rising interest rates. While a cut was expected, the size of it surprised some analysts.

The company’s stock was also removed from the S&P 500, as its shares became “more representative of the midcap market space.”

Correction: A previous version of this story misstated owner of the Dumont Building. It is GFP Real Estate. This story has also been revised to include a statement from GFP.

— Ted Glanzer

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DefaultsHybrid WorkOffice Market