Boston Properties, Moinian Hunt for Loan in Hudson Yards

Boston Properties is in maturity default at the site of a planned skyscraper in Hudson Yards, but its relationship with the lender could grant the developer grace as it searches for fresh financing.

A joint venture of BXP and the Moinian Group are looking for third-party financing to replace an existing $80 million mortgage at 3 Hudson Boulevard, Bisnow reported. The mortgage matured in August and remains unpaid, according to a regulatory filing.

The balance on the loan has since ballooned to $120 million, according to BXP’s supplementary quarterly earnings report. The interest rate is 12.5 percent, up from the 8.9 percent rate the company reported prior to the default.

While the rate and balance may seem daunting, BXP has a good relationship with the lender: BXP. The real estate investment trust originated the $80 million loan when it joined the venture with Moinian in 2018. It replaced a mortgage of the same amount from American General Life Insurance Company.

The estimated equity value of BXP’s 25 percent ownership stake in the project today is $114.2 million. It paid $46 million at closing to purchase its stake in the development site, along with a commitment to fund an additional $62 million if necessary.

Moinian did not respond to a request for comment from the publication. The developer purchased the full city block lot from Verizon in 2005 for $54 million.

The search for financing comes at a challenging time for Manhattan’s office market, which showed signs of recovery on the leasing front last year, but is still beset by larger trends in the sector. The development at 3 Hudson Boulevard is emblematic of those challenges.

Construction began on the 2-million-square-foot development in 2017 and a design was released at the beginning of 2020, ahead of the disclosure of the project’s $2.6 billion price tag. But the project stalled when the pandemic came; outward progress has appeared limited since then.

The joint venture doesn’t have any tenants in place and was seeking at least $200 per square foot from anchor tenants as of last spring, according to the New York Post. That was more than twice the average asking rent in Manhattan at the time.

— Holden Walter-Warner