Feil defaults on fully occupied Queens office tower loan at maturity

At the Queens Atrium, Jeffrey Feil seemed to have done everything right.

The Feil Organization head had refinanced the converted Chiclets factory with a $164 million fixed-rate loan in 2014. 

The firm maintained full occupancy throughout the pandemic, according to Morningstar. In February, the team locked down a 10-year extension of LaGuardia Community College’s lease to maintain that track record.

And yet, in July the CMBS loan backed by 30-30 Thomson Avenue landed in special servicing. Feil had failed to refinance the loan at maturity, according to Morningstar.

A spokesperson for Feil confirmed that the property is 100 percent leased and the firm is in negotiations with the servicer to extend the loan.

The snafu at maturity likely stems from the rise in rates: Feil was paying just 4 percent when the loan matured in July, saddling the firm with a balloon payment. The going rate for CMBS loans, by comparison, is around 7 percent, according to various rate trackers.

For many office owners, those higher mortgage payments could prove untenable.

For the Queens Atrium borrower, that jump would likely just take a whack to cash flow. In March, the property reported a debt service coverage ratio of 2.09, meaning revenue covered loan payments twice over. 

A higher rate would pressure the DSCR, which is closely watched by loan servicers as a measure of loan health. A figure below 1.25 will often land the loan on a watchlist.

That’s likely why Feil is pushing for new terms under the same loan.

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