How many times can Aby Rosen pull a rabbit out of his hat?
Rosen and Michael Fuchs’ RFR Holding released a 320-word statement to the Commercial Observer claiming that it would resolve the debt problem at its Class A office buildings without selling them. How much is such a statement worth? At least enough to buy a subway ride, if you kick in $2.90.
That’s not a knock on the German investors, who know details about their 30 office buildings and debt that are not publicly available. But it is undeniable that office buildings have lost value, that interest rates on CRE have doubled, and that lenders have reduced loan-to-value ratios on new office debt.
Only time will tell if RFR can refinance all of its properties under those circumstances. It stands to reason that in many if not most cases, RFR will have to pony up more capital, sell equity stakes in the buildings, or both.
The company has described SL Green’s purchase of the distressed $224 million loan on RFR’s 522 Fifth Avenue as part of a plan to recapitalize and renovate the building, which sits vacant, four years after RFR’s ill-timed purchase of the property for $350 million. In that case, the previous lender, Credit Suisse, suffered the loss by selling the debt at a discount.
Banks generally don’t want to foreclose on aging, out-of-favor office buildings. But whether RFR can persuade its other lenders to take the necessary haircuts on its distressed properties certainly remains to be seen.
What we’re thinking about: Will the new New York Apartment Association really have a different focus than the landlord groups that merged to form it? Should it? Email me at eengquist@therealdeal.com.
A thing we’ve learned: Local Laws 92 and 94 mandate solar panels or green roofs on new buildings and major renovations. But there are exceptions, depending on fire code setbacks and roof space required for mechanical equipment and recreational uses. The laws also increased the roof reflectiveness required by the cool roofs law.
Elsewhere…
— After acquiring rival bank First of Long Island in a $284 million, all-stock deal, ConnectOne will mark down the value of the smaller lender’s $500 million loans on rent-stabilized buildings by 18 percent, or $90 million, Crain’s reported. The deal is expected to close next year. First of Long Island has $4.2 billion in assets versus ConnectOne’s approximately $10 billion.
— According to Inside Airbnb, since New York City passed Local Law 18, short-term listings for Airbnb have fallen 75 percent but long-term listings (for 30 days or more) are up 50 percent. Airbnb is trying to get the city to repeal or revise the law, claiming that it has not served to make the city more affordable for renters.
— In July, conventional mortgage borrowers made down payments averaging $127,000, while borrowers using FHA and VA loans put $19,000 and $29,000 down, respectively, according to ICE Mortgage Monitor. Buyers in those programs typically must buy private mortgage insurance, which can cost up to hundreds of dollars per month, to compensate for the heightened risk of default.
Closing time
Residential: The priciest residential sale Thursday was $24.5 million for penthouse 6B at 140 West 12th Street. The West Village condo unit is 5,300 square feet and was sold by private investment firm Marron Capital, property records show.
Commercial: The largest commercial sale of the day was $8 million for 324 Avenue Y in Sheepshead Bay, Brooklyn. The commercial building consists of three units across two stories.
New to the Market: The highest price for a residential property hitting the market was $22.5 million for Units 3/4 at 950 Fifth Avenue. The Lenox Hill co-op apartment has four bedrooms and three bathrooms. Douglas Elliman’s Jonathan Stein has the listing. — Joseph Jungermann