Chetrit Org Modifies $714M CMBS Loan on UES

While some Chetrits are facing serious charges tied to alleged tenant harassment, Michael Chetrit’s firm is having a better time of things, restructuring a troubled loan on the Upper East Side.

The Chetrit Organization modified the $714 million debt backing the Yorkshire Towers at 305 East 86th Street and Lexington Towers at 160 East 88th Street, the Commercial Observer reported. The modification brings the CMBS loan current, waives guarantees in the original deal and pushes back the loan’s maturity date, previously scheduled for June 2027.

The restructuring came after months of negotiations with lender Rialto Capital and subordinate debtholders based in both the United States and South Korea. The debt is split between a $539.5 million CMBS loan and $174.5 million in mezzanine debt.

“This modification allows us to continue investing our time and resources into enhancing and stabilizing the property, ensuring it reaches its fullest potential,” Chetrit said in a statement.

Iron Hound Management’s Anthony D’Amelio arranged the restructuring.

The CMBS loan was sent to special servicing at the end of last year. Yorkshire is the bigger of the two buildings with 692 units, about one-third of which are rent stabilized; about half of Lexington’s 149 units are regulated.

Chetrit and the Gluck family of Stellar Management planned to renovate 311 units across the two buildings, according to Morningstar. The towers hold a combined 305 rent-stabilized units, but it was unclear how many of the planned renovations they managed to execute after the loan was sent to special servicing.

Net cash flow suffered, in part because of falling occupancy. The buildings were 97 percent full when the original loan was made in mid-2022; as of December 2023, they were 89 percent leased.

Revenue fell 24 percent in that period, while expenses rose 16 percent. Rent collections at the end of 2023 were still covering 1.6 times mortgage payments. But that figure, known as the debt service coverage ratio, slipped from 3.6 in 2022.

— Holden Walter-Warner