Finance  ·  CMBS

CMBS Loan on Former Tommy Hilfiger Flagship Store Falls 30 Days Delinquent

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A $215 million commercial mortgage-backed securities (CMBS) loan, securing a Manhattan office and retail property that once housed Tommy Hilfiger’s global flagship store, is 30 days  delinquent.

The status of the loan on Metropole Realty Advisors 681 Fifth Avenue was first reported Monday in an email alert from Trepp. The 10-year note, from UBS and Citigroup (C), was originated in November 2016 to refinance $125 million of Ladder Capital debt issued for the building in late 2010. 

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Tommy Hilfiger shuttered the 22,000-square-foot, four-level flagship Five Avenue store in early 2019. The clothing company was the largest tenant at the 82,573-square-foot property, occupying 27 percent of its total square footage. The tenant represented nearly 77 percent of the total annualized base rent when securitized, according to Trepp.

Harry Blanchard, managing director and head of data and analytics at CRED iQ, said the property’s debt service coverage ratio of 1.24 times is below the 1.35 to 1.40 range lenders often require for CMBS deals for office and retail properties. He noted that the borrower has enlisted JLL to handle leasing of the retail space.

“They’ve recently carried out renovations to enhance the space’s appeal to potential tenants, engaging in discussions and tours with interested parties,” Blanchard said. 

The largest office tenant at 681 Fifth Avenue is owner Metropole Realty Advisors, which covers 7,636 square feet in a lease scheduled to run until March 31, 2029, according to CRED iQ. Vera Bradley leases 5,877  square feet in a lease that runs through March 31, 2026. 

The 681 Fifth Avenue CMBS debt is split into five pari passu deals that priced in 2016 and 2017. The loans include $80 million from MSC 2016-UB12, $57.5 million from CGCMT 2016-P6, $34 million from CFCRE 2016-C7, $28.5 million from CD 2017-CD3 and $15 million from CSMC 2016-NXSR.

The property was appraised at $440 million in 2016, which gave the CMBS transaction a loan-to-value ratio of 49 percent at the time, according to Trepp. 

Officials at Metropole Realty Advisors did not immediately return a request for comment.

Andrew Coen can be reached at acoen@commercialobserver.com