With a DSCR of 1.13, 119 West 40th is nearing what Mr. Fasulo called “the red zone” below 1. “Anything even close to 1 now is a red flag because these numbers were compiled at origination of loan, so if they’ve lost a tenant or rents have gone down, they’re done.”
That Comfort was able to negotiate the biggest deal of 2009, despite being in danger of defaulting on 119 West 40th, is a unique product of the current downturn, Mr. Fasulo said.
“In the past, if you lost all this money for your investors, no one would invest with you again; now that’s not the case,” he said. “The tremendous and unique violence of this market is going to give a lot of people a pass. People are going to say, ‘It’s not me, it’s the market.’ Also, there are only so many qualified property owners out there.”
“We are currently in negotiation on all three refinancings, and I expect a good result on each property,” George Comfort & Sons president and CEO Peter Duncan said in an email. He declined to elaborate on the details of specific mortgages.
THE NAME THAT APPEARS most frequently on Real Capital’s list of potentially troubled midtown properties is the once high-flying Broadway Partners.
Broadway’s buildings at 340 Madison Avenue, 450 West 33rd Street, 280 Park Avenue and 237 Park Avenue were in September all classified as potentially troubled (as was 100 Wall Street downtown). Two of them, 100 Wall and 237 Broadway, had loans due in May 2009; 280 Park, which has a $1.1 million mortgage that does not come due until 2016, was also listed as potentially troubled due to a maturing mortgage. Meanwhile, the $472 million mortgage that Broadway took to buy 340 Madison—yet another distressed asset from the Macklowe portfolio—for $550 million comes due on Jan. 1, 2011.
One of Boston’s investments that looked relatively safe in 2008 is also in danger of foreclosure, Mr. Fasulo said: “Four fifty is in bad shape. I think they are going to lose that one.” Broadway paid $700 million for the 16-story office building at 450 West 35th Street in June 2007. The 1.75 million–square–foot building is 85 percent occupied, with tenants including the Associated Press, the New York Daily News, and U.S. News & World Report.
“Broadway is current on its loan obligations and has no maturities in the 2009-2010 time frame,” a Broadway Partners spokesman told The Commercial Observer in an email. He declined to comment on the terms of specific loans.