Metropole faces foreclosure on 681 Fifth Avenue for $215M default

Metropole’s 681 Fifth Avenue is facing foreclosure after defaulting on a $215 million loan.  

Special servicer Rialto Capital is suing Metropole on behalf of the lenders for failing to make its CMBS loan payments on the 12-story building since July. Metropole missed monthly payments of about $773,000, totaling roughly $2.4 million, according to a lawsuit filed in New York State Supreme Court.

The building’s prime retail space has been vacant since Tommy Hilfiger shuttered its 22,000-square-foot flagship store in 2019. The store occupied 27 percent of the 82,573 square foot building and represented 77 percent of the total annualized base rent when the mortgage was securitized.

Tommy Hilfiger continued to pay its rent in full until the lease expired in May of last year, according to Metropole CEO Robert Siegel. Since May, Metropole has spent about $350,000 renovating the property.

A notice of default was sent to Metropole in October and Rialto sent a notice of acceleration in December, according to the lawsuit. Rialto sent Metropole a pre-negotiation letter and was in discussions with the firm last month, according to Morningstar.  

Meanwhile, Siegel remained bullish on Fifth Avenue retail, telling The Real Deal that he had never seen vacancies so low.

Both Siegel and Rialto representatives did not respond to requests for comment.

Metropole acquired the property in 2005 for $86 million from Fortunoff, a New York-based furniture and jewelry retailer. The building is between East 53rd and East 54th streets, one of the world’s priciest stretches of retail real estate. 

The CMBS loan came from a 2016 refinancing of the office and retail building by UBS and Citigroup. The loan, which now matures in November 2026, replaced a $125 million Ladder Capital loan that was scheduled to mature in 2018.

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