The Distress Record: Kassirer, Benko, Blackstone face year-end trouble
Multifamily, office landlords stare down legal issues as 2023 winds down
Holiday cheer isn’t in the air for office and multifamily developers and landlords.
In New York, another rent-stabilized landlord is in trouble. This time, it’s Isaac Kassirer facing foreclosure after defaulting on $110 million in debt tied to affordable housing in the Bronx.
A trustee for the CMBS debt is looking to foreclose on the properties. The loans were issued in 2019, the same year that a much-derided rent law was passed, making it harder for landlords to raise rent at rent-stabilized properties. The impending foreclosure is the latest spate of trouble for New York’s affordable housing landlords.
An Austrian court is forcing a sale of Signa Holding’s stake in the Chrysler Building. The mandate for Rene Benko’s firm comes after it filed for insolvency last month.
Benko’s company is believed to hold a 50-percent stake in the 77-story office tower. Benko and Aby Rosen’s RFR Holding purchased the iconic property in 2019 for roughly $150 million, a discount from expectations attributed to the pricey ground lease.
Since Signa filed for insolvency, dozens of creditors have submitted claims to the tune of more than $1.2 billion. The company’s workforce has been reduced to single digits and assets, including a private jet, are being offloaded.
In Chicago, a growing number of Loop landlords are facing distress, including British art dealer Ivor Braka and Alvarez & Marsal, who are nearing a $51 million default at an office tower in the neighborhood.
In 2004, Braka paid just under $11 million to buy 332 South Michigan Avenue, a 326,000-square-foot office building. Now, Braka faces “imminent default due to cash flow issues” on a $33 million loan he took out in 2016 using the property as collateral, according to loan servicer commentary compiled by DBRS Morningstar.
The loan wasn’t scheduled to mature until 2026, and the Michigan Avenue property was appraised at more than $56 million when the debt was issued.
Chicago’s office market woes are not confined to downtown.
In Schaumburg, bargain-hunter IndusPAD closed on another purchase, this time for the cut-rate price of about $7 per square foot. And in Naperville, Accesso Partners is nearing a default on a nearly $20 million loan.
IndusPAD, a Massachetts-based firm that has made a habit of snagging distressed properties, has taken on multiple opportunities in Schaumburg. Most recently, the firm bought a fully vacant 178,000 square-foot office complex at 955 American Lane for $1.3 million, Cook County records show. The seller was Phoenix-based Orion Office REIT.
In Las Vegas, a 68-acre, 1.4-million-square-foot Hughes Center owned by Blackstone has been heading into special servicing as Blackstone approaches default. Once one of the city’s commercial hubs, it’s now sitting at 58 percent occupancy, a 7-percent decline from last year.
At least one industry expert who believes the property will be sold.
“You have a prime location next to the Sphere, the Venetian, the proximity to the Strip,” Michael Petrivelli, director of market analytics for CoStar Group in Nevada and Utah, told the Las Vegas Review Journal. “The issue is, the current use of the property now has nothing to really do with the Strip and the activity that’s happening there right now.”
Also in the news:
Barings is looking to sell a 20-story office tower in San Francisco’s Yerba Buena for $80 million, or 46 percent less than it sold for nearly a decade ago.
Regardless of the jury verdict delivered to former Chicago alderman Ed Burke’s co-defendant Charles Cui in a corruption trial, the developer isn’t in the clear on other legal issues he’s facing tied to local real estate. He’s been delinquent since 2020 on a nearly $10 million loan against the 63,000-square-foot retail building he developed at 4901 West Irving Park Road, according to public loan data.