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Bush Terminal leads latest Fitch downgrade
10-story Stamford, Conn. property was third-largest contributor to the overall loss
On the same day Industry City Associates issued a statement that 40 acres of affordable multi-use industrial space had come online at Industry City at Bush Terminal, Fitch Ratings downgraded a $2.6 billion pool of commercial real estate loans issued by Greenwich Capital Commercial Funding and led by a loan backed by the Bush Terminal waterfront complex.
Last Friday, Fitch cited lower occupancies at Brooklyn’s Industry City complex, the Sunset Park creative enclave which comprises 40 acres of Bush Terminal, following a default on $300 million worth of loans in January 2011.
Industry City, whose official office is at 882 Third Avenue, is a 6 million-square-foot complex that is being redeveloped into 690,000 square feet of office space and 2.5 million square feet of loft and showroom space.
Occupancies at the property have fallen to 66 percent as of August 2011 from 87.2 percent when the conversion began, in part because space was being kept vacant to attract new tenants. At the beginning of the conversion, $25 million was placed in reserve, but only $14.4 million remains available.
Fitch said a recent valuation of the property called for significant losses.
“Ownership is making progress in its discussions with the servicer and expects to reach a positive resolution soon,” the owners, Industry City Associates, told The Real Deal, in a statement.
As The Real Deal previously reported, Time Equities pulled out of a deal to redevelop the site in 2009, citing the economic downturn.
The Brooklyn Eagle recently signed two five-year leases for 10,000 square feet at 883 Third Avenue, which is also owned by Industry City Associates.
Industry City will also be hosting Brooklyn Fashion Weekend, from March 29 to April 1.
The third-largest contributor to the overall loss is the Clearwater House loan, which is backed by a 10-story, 105,600-square-foot office building at 2187 Atlantic Street in Stamford, Conn. The loan was transferred to special servicing in May 2010, based on imminent default.
Since then, a new investor, Manhattan-based Ascent Real Estate Advisors foreclosed on the property’s mezzanine debt and gained control of the building. The property’s special servicer is pursuing a foreclosure, but is in talks with the firm regarding a loan modification.
The property was 100 percent leased in 2009, but has since fallen to 61 percent as of April 2011. Pimco‘s Allianz unit, the building’s largest tenant, had leased space at the property, but did not fully occupy it. Pimco did not renew its lease upon expiration in 2010.
Ascent officials were not immediately available for comment. A Fitch spokesperson was not available either.