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APF defaults on another WeWork-less office building

Firm has wiggled out of distress on other problem assets

APF Defaults on Another Office Building Once Leased to WeWork
APF Properties’ Kenneth Aschendorf and Berndt Perl with 28 West 44th Street (Getty, Google Maps)

APF Properties, the office landlord that made a big, bad bet on WeWork, has defaulted on debt tied to another Midtown office property that lost the coworking firm as a top tenant. 

This transfer hits close to home. The Club Row Building, which backs the $155 million loan in question, houses APF’s headquarters at 28 West 44th Street, a block from Bryant Park.

APF’s Kenneth Aschendorf did not immediately return a request for comment. The firm’s co-founder Berndt Perl could not be reached. 

The default, reported by Morningstar this month, is at least APF’s fourth in recent years and its third on a building that lost WeWork as a tenant. 

After the beleaguered firm filed for bankruptcy, it cut or amended hundreds of leases, and a handful of APF’s buildings were on the chopping block: 1156 Sixth Avenue, 25 West 45th Street, 183 Madison and the Club Row Building.

WeWork took up just two or three of the buildings’ floors, but the properties aren’t big. APF’S 1156 Sixth, for example, stands nine stories tall and WeWork cut three floors — that’s a gaping vacancy for a property already suffering through the pandemic’s hit to office. 

At the Club Row Building, WeWork left two of the property’s 14 floors empty. The building is a dinosaur — built in 1920 and last renovated in 2014. That type of older office stock has become notoriously difficult to lease. So a 14 percent vacancy rate is nothing to sneeze at. 

Some of APF’s defaults are still working their way through the system.

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For example, 25 West 45th Street has been entangled in foreclosure proceedings since APF defaulted on a $70 million loan last May, then told its servicer it could not repay the debt.  A receiver was appointed in July. 

On others, there’s been progress. After missing the maturity date on the $173 million mortgage backed by 183 Madison, APF managed to pay off the loan in late 2023. 

And the landlord found an unknown buyer for 24 West 57th Street this month after Wells Fargo filed to foreclose on the building, then tried to shop its debt. The building did not have exposure to WeWork. The sale price — $67 million — covered the building’s $50 million loan.

Special servicing is a space to cut deals. So the transfer of the Club Row Building’s debt this month could pan out for Aschendorf and Perl. The sponsors defaulted at maturity, so negotiations could gain them more time. 

However, it’s unclear whether servicers are still offering extensions on the bet that interest rates will fall. 

And Club Row is in sorry shape. The building as of September was 63 percent occupied and revenue was only just covering debt service. 

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