CIM’s 1440 Broadway Nabs Modification Amid 46% Value Cut

In October, CIM Group was ready to throw in the towel on 1440 Broadway.

The landlord, faced with anchor tenant WeWork’s impending bankruptcy, the building’s waning revenues and its mortgage’s pending maturity in March saw its $399 million loan go to special servicing.

CIM and co-owner QSuper “will be deeding the property back to its lender,” an October investor update reported by Trepp declared.

But it did not.

This month, the asset nabbed a lifeline. A loan modification pushed the maturity date to October 2025 and replaced the guarantor’s general partner, according to Morningstar Credit.

It’s unclear which guarantor is getting the boot. Both CIM and QSuper are listed as sponsors. Neither returned requests for comment.

Notwithstanding the workout, the firms did blow their maturity deadline, which triggered a rough reappraisal. The property was revalued at $320 million in May, a 46 percent cut from its 2021 value of $595 million, according to Morningstar Credit.

Last year was a leasing nightmare for the Times Square office building.

WeWork, which occupied 40 percent of the net rentable area, reworked its lease about a month after its November bankruptcy filing undermined landlords’ leverage. New terms cut the co-working firm’s rent to $44 per square foot from $73 — a 40 percent discount — and moved up its expiration date by seven years to 2028, Bloomberg reported, citing a JPMorgan note.

Weeks after that shakeup, 1440 Broadway lost its second-largest tenant, Macy’s, in January. The retailer declined to renew its lease, leaving a quarter of the building’s net rentable area dark.

The Midtown building is now just 58 percent occupied, JPMorgan analysts estimate, and its gross rental income is down 52 percent from a year ago.

Under the circumstances, WeWork’s amended lease is a blessing. The coworking firm has outright exited dozens of New York City leases as part of its Chapter 11 bankruptcy, which it hopes to exit by May 31.

Filling Macy’s footprint, though, could be a challenge. Office leasing took a dive in the first quarter of 2024, as 25 percent less space was leased than in the fourth quarter of 2024, according to Colliers — an uncharacteristically sharp decline for the period. Availability clocked in at a record high of 18 percent in March.

Newer offices continue to attract tenants. But 1440 Broadway, 100 years old and last renovated in 2018, may not be fresh enough to fetch the rents it needs.

As Related’s Jeff Blau, speaking generally, put it: “There is a big difference between a 50-year-old, well-taken-care-of building and a new building.”