It was a close call.
George Comfort & Sons’ last-ditch refinancing effort has kept its Westchester office campus from being foreclosed by its mezzanine lender, an affiliate of Oaktree Capital Management.
The $134 million refinancing deal that rescued the Manhattan-based landlord’s Centre at Purchase office campus consists of a $105 million mortgage loan from Bank of America and a $29 million mezzanine loan from real estate lender RCG Longview, according to George Comfort & Sons.
The loan replaces $132 million in debt — a $94 million mortgage and a $38 million mezzanine loan — issued by JPMorgan in 2017, a decade after George Comfort & Sons, in partnership with New York-based real estate investment firm O’Connor Capital Partners, acquired the 686,000-square-foot property at 1, 2, 3, 4 Manhattanville Road in Harrison for $166 million from Related Properties.
JPMorgan then sold the mezzanine portion to Oaktree.
The 2017 loan’s initial maturity date was August 2019, but the owners exercised their right to extend the term by two years. By June 2021, they were negotiating potential refinancing deals with Bank of America and Citibank.
But the appraisal that they needed to refinance went awry when one tenant downsized and another failed to file a notice of renewal, causing a projected $900,000 reduction in an annual rental income. Refinancing deals on the table fell apart and the owners had to start from scratch, according to court documents.
The owners let the lenders know that they needed more time to refinance. They didn’t get it.
Just a week after the loan’s maturity date, on Aug. 16, Oaktree moved forward with a UCC foreclosure process, setting up a Sept. 20 auction to snatch the owners’ equity interest in the property.
The owners filed a lawsuit against Oaktree on Sept. 16, seeking an injunction. They argued that a foreclosure would be unreasonable because the property’s appraisal was $172 million, much more than the total loan amount, and that they had potential lenders lined up for refinancing but needed more time.
“Plaintiff has never missed a payment on the mezzanine loan,” their lawsuit stated. “Plaintiff has diligently and successfully pursued refinancing in order to satisfy the outstanding indebtedness, and will continue to make monthly interest payments in the brief period until the refinancing can be closed.”
The court then set up a hearing for the morning of the auction date. Apparently, that prompted the parties to discuss a resolution outside the court. The auction did not happen.
With the refinancing done, the lawsuit was discontinued last week. Oaktree declined to comment.