CMBS Loan on 20 Times Square Enters Special Servicing

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A $900 million commercial mortgage-backed securities (CMBS) loan on Maefield Development’s 20 Times Square, which housed a short-lived Marriott-branded hotel forced to shutter during the COVID-19 pandemic, has transferred to special servicing.

The Midtown, Manhattan mixed-use property’s loan transfer was first reported in an email alert from Trepp Monday morning. Marriott International opened the 452-room Times Square Edition Hotel at the property, also known as 701 Seventh Avenue, in early 2019 but was forced to close it in August 2020 early in the pandemic.

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The loan was transferred to special servicing on Nov. 3, CRED iQ data confirmed. An event of default occurred as a result of $26.8 million of liens that were filed against the property in connection with construction of the hotel and various foreclosure actions filed, according to CRED iQ data, which cites the latest special servicer commentary on the loan. 

Natixis originally supplied the loan in 2018. The debt is scheduled to mature in May 2023. 

Collateral for the loan was a 99-year ground lease on the property, which was supposed to be supported by revenue from the hotel, four floors of retail space and Times Square electronic billboards. 

The National Football League was the anchor tenant for the retail space with a  43,130-square-foot NFL Experience store that closed shortly after opening in 2018. The NFL was slated to pay $8.25 million in annual rent at the time of the underwriting, according to loan documents.

The outstanding CMBS debt is spread across four deals with the biggest exposure deriving from $750 million tied to the single-asset TSQ 2018-20TS deal, which includes subordinated pieces of the debt package, according to Trepp. 

Twenty Times Square is not the first deal Maefield and Natixis have worked on that went south. The French investment bank also provided a $60 million loan to Maefield, led by Mark Siffin, for his affiliate company MDC Energy before it filed for Chapter 11 bankruptcy in 2019. 

The Times Square property is also saddled with $150 million of mezzanine debt. Lenders on the mezz portion of the deal include Korean banks KB Kookmin, Hana and NH Nonghyup along with other institutional investors in Korea, the Korea Herald previously reported

Officials at Maefield Development and Natixis did not immediately return requests for comment.

Andrew Coen can be reached at acoen@commercialobserver.com.