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New York

Shorenstein falls behind on 1M sf Garment District office tower

Special servicer notes ‘inability to pay monthly debt service’ as 1407 Broadway falls into delinquency

Shorenstein Properties Delinquent on 1407 Broadway
Shorenstein Properties' Brandon Shorenstein and 1407 Broadway (Shorenstein Properties, Google Maps)

Shorenstein Properties has fallen into arrears on its marquee New York office tower and may not be able to cover its payments.

The San Francisco-based investment firm is 30 days delinquent on the $350 million mortgage backing its 1.1 million-square-foot tower at 1407 Broadway, according to Trepp. The loan has been transferred to special servicing.

“The transfer does not appear to be the relatively benign transfer that surrounds negotiations over an embedded extension option,” Trepp wrote in a notice Monday. “In this case, September special servicer comments reference the borrower’s ‘inability to pay monthly debt service.’”

A representative from Shorenstein did not respond to a request for comment.

The single-asset, single-borrower CMBS loan matures in November, with an option to extend for another year.

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The 43-story building was 84-percent occupied at the end of the year, according to Kroll Credit Profile, which was down from 94 percent when the loan was issued in 2019.

Many office owners with low occupancies are struggling to refinance their properties in the high-rate environment. Extending maturities can also come with requirements to purchase new, costly interest-rate caps and to maintain certain liquidity ratios. Some owners choose to stop making payments or to turn the properties over to their lenders instead of throwing more money into struggling properties.

Shorenstein paid $330 million in 2015 to acquire the leasehold on the Broadway asset, which sits at the edge of the Garment District between West 38th and 39th streets near Times Square and Bryant Park. The company, led by CEO Brandon Shorenstein, invested $62 million over a period of three years to upgrade the 1950s-era tower with a new lobby, elevator cabs and common areas.

Comcast signed a 100,000-square-foot lease in the building in 2017.

Shorenstein refinanced the property after the renovation  in 2019 with the $350 million loan, which was provided by Barclays. 

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