Property taxes tripped up Aby Rosen at Union Square.
The $104.5 million mortgage backing RFR Realty’s office building at 90 Fifth Avenue is headed to special servicing, Crain’s reported. Rosen’s 140,000-square-foot property has been plagued in recent years by rising vacancy and declining cash flow.
Cash flow fell last year by 8 percent to $5.9 million, according to bond rating firm KBRA. Vacancies are on the rise at the 11-story building, where half of the space is available immediately.
Real estate brokerage Compass is the anchor tenant, occupying 89,000 square feet on all but the bottom two floors for its headquarters. But the unprofitable company began subleasing two floors prior to the pandemic and last year offered even more of its space for sublease ahead of its leases expiring in 2025.
The retail space is occupied by Republic Bank, which is months away from its lease expiring.
Missed loan payments are typically what sends debt into in special servicing, but RFR is not even 30 days delinquent on its loan, accordion got KBRA. The central issue for RFR was that Rosen fell behind on property taxes.
Ownership of the property is scheduled to pay taxes semiannually. RFR missed its payment last June and was hit with a property tax bill in January that included $1.8 million in new charges and $2 million in outstanding charges from the previous missed payment. The bill was paid in full last month.
Rosen has owned the property at the corner of 14th Street since 2000. In 2013, RFR embarked on a plan to upgrade the property by renovating the lobby, installing new elevators and bathrooms, restoring the exterior and refurbishing the retail space.
RFR declined to comment to Crain’s.
Two months ago, Wilmington Trust sued an entity managed by Rosen for allegedly defaulting on a $15.1 million mortgage collateralized by a single-story building on Lincoln Road in Miami-Dade County. Rosen is in danger of losing the property to foreclosure.
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