Moshe Wechsler has been granted a reprieve from debt payments on a massive Chicago multifamily loan.
Fannie Mae has struck a forbearance agreement with Wechsler’s New York-based firm Emerald Empire on at least $125 million worth of loans attached to Chicago apartment properties. The rental buildings were sold by Chicago-based Pangea Properties in a huge real estate trade nearly three years ago. The deal made Emerald one of the city’s largest landlords overnight and constituted one of the priciest multifamily transactions in Chicago history, if not the city’s outright biggest deal in the sector.
The transaction involved about 7,500 housing units spread across more than 400 buildings, with a total price tag of about $600 million.
Now, however, at least some of the debt has required the borrower to ask for a pause on payments.
“The loans in question are currently in forbearance and are performing in accordance with the agreement,” a Fannie Mae spokesperson said.
The properties in forbearance are encumbered by a tranche of debt within a bigger $430 million financing package, according to public records. Emerald borrowed the money from a group led by Arbor Realty Trust affiliates, according to Cook County documents. Lender NewPoint Real Estate Capital also participated in the financing before the debt was sold off to Fannie, the government-sponsored agency.
At the time the deal closed, Arbor described it as one of the largest Fannie Mae Structured Adjustable-Rate Mortgage loans of 2022; because its interest rate is adjustable, the costs of debt service have likely risen from when the deal was originated, since the Federal Reserve increased its key interest rate over the course of 2023.
It’s unclear whether the $125 million tranche is the only portion of the package that has entered forbearance for now, or whether additional sections of the mortgage debt are also going without payment from the borrower.
Wechsler and Emerald Empire didn’t return requests for comment.
The forbearance agreement is a sign that Emerald Empire is working to get its operations in order to catch up on the loan. But it’s unknown why the firm sought to enter forbearance. The mortgages aren’t scheduled to mature until Jan. 1, 2033, public records show.
City officials have taken issue with the conditions of multiple properties within the portfolio, though. There’s a handful of properties Emerald owns that are currently making their way through the city’s housing court for building code violations. The landlord has been ordered to pay fines to the city at multiple properties for issues such as maintenance of rat abatement measures. Emerald has incurred multiple fines of $500 or more from city code violations at numerous properties, public records show.
It’s unknown whether the allegedly poor property conditions are a factor in the forbearance agreement.