One of the trophy properties in TF Cornerstone’s Manhattan portfolio could face a rough road ahead.
The firm’s 230 Park Avenue South office building, which it purchased in 2007 for about $230 million, is showing signs of distress. The coronavirus also may complicate the gradual move-in of its sole tenant.
TF Cornerstone has been slightly behind on mortgage payments every month this year on the 13-story building, according to data from Trepp. Its sole office tenant is Discovery Communications, which just started moving in this January and expects to fully occupy the building by the end of the year.
Discovery and Scripps Networks had planned to consolidate their New York City offices with a 250,000-square-foot lease at 230 Park Avenue South. That decision followed Discovery’s $12 billion takeover of Scripps. Asking rents were in the range of the high $70s to the low $80s per square foot.
Discovery was going to start paying rent on the property in June, but there is now no guarantee of that or of the planned move-in dates, according to Trepp.
Representatives for Discovery and TF Cornerstone did not respond to requests for comment.
TF Cornerstone obtained a 10-year $250 million loan split across three CMBS deals on the 350,000-square-foot building from Wells Fargo in September. Its first payment was due in October with a mortgage rate of 3.27 percent, according to Trepp. Late payments have occurred on a $30 million piece of the loan, while payments on the two larger pieces have remained current.
Fitch has given Discovery Communications a BBB- rating and a stable outlook despite the pandemic thanks to its “leading market position driven by strong niche brands and programming.”
Trepp began monitoring CMBS loans that are “late but within grace period” and “late beyond grace period” last week. The firm believes this information “serves as an early indicator of what could become 30 days delinquent a month from now.”