Payment Due! Class A Midtown Loans

The New York Observer reported in August that Broadway renegotiated $459 million of loan payments to its primary lender, Lehman Brothers, that were due in May on 10 properties it purchased between December 2006 and May 2007. Broadway agreed to transfer three of the troubled properties to Lehman in July, and retain a minority stake in the remaining seven in exchange for an immediate cash payment of $26 million and an additional $14 million later. Lehman agreed to extend the loans to June 10, 2012.

Meanwhile, income on many of the buildings Broadway paid top dollar for are dipping fast. The office tower they bought at 280 Park for $1.25 billion in November 2007, with a $1.1 billion loan from JV Investcorp Realty, for instance, is now worth only one-tenth of what the firm bought it for: $147 million.

 

TWO BUILDINGS WITHIN A block of each other on West 57th Street are listed as potentially troubled due to mortgages that matured on Oct. 1. A JPMorgan CMBS Fund holds both the $29 million first mortgage on 50 West 57th Street and the $31 million first mortgage at 140 West 57th Street. Though both properties have gone into special servicing, in looser credit markets both would have surely qualified for refinancing. With a DSCR of 2.06, the 89,650-square-foot property between Sixth and Seventh avenues seems to be in slightly better shape than the smaller building one block east, which has a DSCR of 1.41.

Which brings us to Mort Zuckerman’s Boston Properties, the REIT that now finds itself, rather paradoxically in the current market, with both the largest number of mortgages maturing in 2010, and piles of cash at its disposal. As of July, Boston had $820 million in cash and nearly its entire billion-dollar line of credit available, according to its 2009 second-quarter earnings report.

Boston took a $188.3 million write-down on three of the office buildings it bought from Macklowe last year for $1.1 billion, and the overall occupancy in its eight midtown properties fell from 99.8 percent at the end of the second quarter in 2008 to 91.6 percent by June 30, 2009. It also reported a $23 million loss from the suspension of the planned construction of a tower at 250 West 55th Street.

Payment Due! Class A Midtown Loans