For the second time in a matter of months, Nathan Berman’s Metro Loft Developers is in danger of defaulting on a Financial District office-to-residential conversion.
The $265 million senior mortgage backing 180 Water Street is set to mature this month, Crain’s reported, with KBRA recently downgrading the mortgage to “underperform.” A $100 million mezzanine loan is also coming due this month.
“It is unknown if the borrower will be able to pay off the loan maturity,” KBRA said.
For what it’s worth, Berman doesn’t seem to be too stressed. He told the publication that the firm was “working things out with both lenders,” without diving into specifics.
Deutsche Bank provided the $265 million senior mortgage in 2019, portions of which were collateralized in commercial mortgage-backed securities, according to the Commercial Observer. Wells Fargo was assigned the mortgage as trustee of the debtholders, according to public records.
Deutsche also originated the mezzanine loan before Rockwood Capital began controlling that debt in 2019, the Observer previously reported.
In 2017, Berman paid $450 million to buy partner Vanbarton Group out of the rental tower. That came three years after Metro Loft purchased a minority stake in the property and two years after the partners embarked on a $100 million conversion of the property.
The 573-unit, 460,000-square-foot conversion was completed and opened to tenants in 2017, who quickly swept up 97 percent of its units. Occupancy is up to 98 percent and the average rent is $4,800, but rent increases have been stagnant compared to the rest of Manhattan in recent years and long-term leases are often accompanied by free months.
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Amenities at the property include a 1,200-square-foot courtyard and an indoor pool.
Berman is one of the kings of conversions in New York City, but even he has not been immune from distress. Over the summer, Metro Loft revealed that it wouldn’t be able to repay a $250 million loan backing 20 Broad Street when the debt matured in the succeeding month. Since then, talks about a modification have continued, according to Fitch Ratings, which could mean an extension, interest rate increase or a principal paydown.