A 250,000-square-foot shopping center in Harlem may be on the verge of defaulting on its debt. Grid Properties principal Drew Greenwald isn’t sweating it.
Co-owners Grid and the Gotham Organization could default on a $108 million mortgage backing Harlem USA at 300 West 125th Street, according to an analysis by credit rating agency KBRA reported by Crain’s. Investors could take a $26 million hit on the “loan of concern,” according to KBRA.
The root of concern appears to be the 26 percent vacancy rate, which is 10 percentage points higher than the neighborhood average, according to the Department of City Planning. Modell’s Sporting Goods, Chuck E. Cheese, and Buffalo Wild Wings closed during the pandemic, but none have been replaced so far and 50,000 square feet are left empty. The vacancy rate was only 5 percent the year before the onset of the pandemic.
The loan is slated to come due next year, when ownership will likely face interest rates above the current 3.3 percent.
KBRA estimated the property is worth $82 million, well below the value of the most recent mortgage.
Despite long-term vacancies, co-owner Greenwald said he believes the complex will be fully leased in the next 12 months. He claims an unnamed supermarket will arrive soon and the property is generating more than enough cash to pay its bills. The KBRA analysis appears to validate that confidence, as the property is generating 170 percent of the necessary cash for existing debt obligations.
“I’m not the least bit worried,” Greenwald told the outlet of KBRA’s analysis.
Harlem USA, located across the street from the famed Apollo Theater, was the first property in the neighborhood to host national chains. Tenants include Old Navy, which is on a lease for 35,000 square feet set to expire in 2028, and the nine-screen AMC Magic Johnson movie theater, set to continue occupying nearly 70,000 square feet until at least 2030.
Read more
Commercial
New York
Buffalo Wild Wings chickens out on Harlem lease
New York
Clans with plans
Commercial
New York
The Real Deal Podcast: David Picket
