Stephen Haymes wants to modify the loan backing his prominent office tower near Penn Station, but the debt is taking a trip to special servicing.
The $260 million commercial mortgage-backed security tied to Haymes Investment’s 5 Penn Plaza was transferred to special servicing, according to Bisnow. The debt movement was first disclosed by Morningstar Credit.
The landlord is looking to modify the loan, according to its chief financial officer. The debt is set to mature in January 2026. Debt-service coverage ratio dropped below breakeven levels in recent years, according to the loan servicer report, indicative of weakening cash flow.
When Citigroup originated the debt in 2016, occupancy of the 679,000-square-foot building was around 97 percent. The loan servicer report pins occupancy as of March at 76 percent. A Haymes official said 30,000 square feet of leases had been signed in the past month and occupancy was nearing 85 percent, though they did not share details of the incoming tenants.
Haymes also recently made upgrades to the property, adding a golf simulator, rooftop terrace, gym and conference center. The building’s most recent appraisal of $540 million dates back to before the upgrades.
The landlord has managed to stay up to date on its interest payments. This year, it requested access to reserves held by the lender, according to watchlist commentary. In addition to the primary CMBS loan, Haymes also received a $40 million mezzanine loan in 2016; the combined debt refinanced a $200 million CMBS loan.
Manhattan’s office market has seen its fair share of struggles in recent years and Midtown has not been immune. Last month, a nearly 1-million-square-foot office building on West 50th Street sold for $8.5 million after being listed on the Ten-X online auction site. That represented a stunning 97 percent decrease from the $332.5 million UBS paid for the property in 2006.
Read more
Commercial
New York
Sale of office building once worth $332M closes for 97% less
New York
Citigroup provides $300M loan for Haymes' 5 Penn Plaza
Architecture And Design
New York
Architecture firm HLW relocating to Haymes' 5 Penn Plaza