Savanna Chases Sale at 521 Fifth Ave to Avoid Foreclosure

If Savanna’s stewardship of 521 Fifth Avenue is at an end, the firm is determined to go out on its own terms.

The office investor is working towards a sale of the 500,000-square-foot property near Grand Central Terminal, Bisnow reported. Debt special servicer LNR Partners is collaborating on the sale process, which would help Savanna duck a foreclosure that’s at least a year in the making.

LNR declined to comment to the outlet, while Savanna did not respond to a request for comment.

Savanna’s been in trouble at 521 Fifth Avenue since last November, when Wells Fargo — acting as a trustee on behalf of CMBS bondholders — filed a preforeclosure suit against the landlord. The bank angled for a sale of the 39-story property to recoup losses.

Savanna was allegedly past due on a $242 million loan backed by the property, which features an Urban Outfitters store and an Equinox gym, in addition to office space. The loan matured in June 2021, according to the suit, but Savanna received three extensions that took the loan through last June.

The loan helped finance Savanna’s $381 million purchase of the property from SL Green in 2019.

A default judgment in favor of the lender was issued in August. At that point, the debt had ballooned to $259 million with interest accumulating. An auction would be the next step, but no date has been set.

The property was 93 percent occupied when Savanna obtained the lease, but that dropped to 68 percent as of June, according to Morningstar Credit. Urban Outfitters — the largest tenant with 26,000 square feet — is on a lease set to expire in a couple of months.

Savanna recently pulled a rabbit out of its distress hat, securing $510 million to refinance the 683,000-square-foot office building at 5 Bryant Park. King Street Capital Management and Blue Owl Capital originated the floating-rate loan on the property.

Despite dealing with its own set of office distress, Savanna bought the leasehold on 430 West 15th Street in the Meatpacking District for $85 million in February, a discount to the $159 million that Invesco paid for the property in 2018.

Last November, Savanna bought the newly constructed office building at 799 Broadway for $255 million after owner Columbia Property Trust had defaulted on its $270 million mortgage.

— Holden Walter-Warner