Wells Fargo Shops APF’s $50M Office Loan

APF Properties’ lender at 24 West 57th Street has had enough.

After giving the owner of the New York Gallery Building two modifications and two extensions on its $60 million loan, the bank filed to foreclose on the aging Plaza District showroom and office space known as the New York Gallery Building.

That was in January, after five months of trying to get APF’s Kenneth Ashcendorf and Berndt Perl to pay.

But Wells Fargo, like many lenders, isn’t looking to take title. Instead, the bank is shopping the debt.

The loan has a principal balance of $50 million, according to marketing materials from Eastdil Secured, an investment banking firm Wells Fargo holds a minority stake in and has tapped to sell the debt.

How far has the building’s value fallen? Just 18 months ago, APF was hoping to get $80 million for it. The office landlord had pitched the site as a redevelopment play in the heart of Billionaires’ Row and tapped Eastdil Secured to shop the property in January 2023.

Neither APF nor Eastdil Secured responded to requests for comment.

Now marketing the loan, Eastdil is again touting it as a chance for a new owner to adapt the office property. Proposed uses include a revamped office building, a private club, a covered land play, a conversion to residential condos or ground-up hotel project.

For Wells Fargo, selling the note would bypass the headache and expense of a judicial foreclosure. It would also save the lender from writing the loan off as a loss, an appealing prospect given the way regulators and investors are focusing on the balance sheets of banks with big CRE loan portfolios.

APF in the past year has struggled with payments on loans backing at least three other Midtown office properties: 25 West 45th Street, 183 Madison Avenue and 28 West 44th Street.

All had leased space to WeWork, albeit small portions of each building. WeWork as of November has exited all three, a spokesperson for the co-working firm said.

APF was hit by a foreclosure filing in May on 25 West 45th, a century-old building, after it failed to pay off a $70 million loan at maturity. That foreclosure is still working its way through the courts. A judge appointed a temporary receiver Monday to collect rents, according to a court filing.

In September, the firm missed the maturity date on 183 Madison Avenue’s $173 million floating-rate CMBS loan, but managed to pay off the debt in October, according to Morningstar Credit.

Aschendorf and Perl also fell behind on payments on the $155 million loan tied to the Club Row Building at 28 West 44th Street in May.

The sponsors caught up the next month, but are still grappling with a 67 percent occupancy rate and cash flow that does not cover payments on the loan, which matures in January.