Finance  ·  CMBS

Shorenstein Properties Defaults on $350M CMBS Loan Tied to 1407 Broadway

Trepp first reported the loan is 30 days delinquent and is now in special servicing

reprints


A $350 million loan secured by 1407 Broadway, a 43-story office building just south of Times Square, is 30 days delinquent and has been sent to special servicing, according to a report from Trepp

Shorenstein Properties, a San Francisco-based real estate investment firm, purchased the 1.1 million-square-foot building in April 2015, as part of the firm’s Fund Eleven portfolio. 

SEE ALSO: Partners Group Acquires Minority Stake in Hotel Developer Trinity Investments

The loan backs the 2019 single-asset, single-buyer commercial mortgage-backed securities (CMBS) deal, BBCMS 2019-BWAY, that was scheduled to mature in November 2023, according to Trepp Data. The initial mortgage for the $350 million loan was structured as a two-year, floating-rate, interest-only first-first lien mortgage loan with three one-year extension options, according to Fitch Ratings.    

The special servicer is Keycorp Real Estate Capital Markets, according to CREDiQ.

Built in 1950, 1407 Broadway is one of a dozen Manhattan office and residential towers owned by Shorenstein, which also boasts The Starrett Lehigh Building, 1180 Avenue of the Americas, 650 Madison Avenue and 14 Wall Street in its portfolio of prime New York City properties. 

However, it appears Shorenstein has fallen behind on 1407 Broadway. The initial report from Trepp did not mince words when describing the nature of the loan default. 

“The transfer does not appear to be the relatively benign transfer that surrounds negotiations over an embedded extension option,” Trepp wrote. “In this case, September special servicer comments referenced the borrowers ‘inability to pay monthly debt service.’ ” 

Shorenstein did not respond to a request for comment. 

A 2019 article from Commercial Observer lists Barclays (BCS) as the bank that provided financing for the $350 million loan, used by Shorenstein to refinance its leasehold interest on the property. The five-year loan had retired around $270 million in debt previously provided to Shorenstein by Bank of America (BAC) back in 2015, which funded the firm’s 2015 ground lease purchase of the property. 

The building was 80 percent leased upon Shorenstein’s purchase. Before Shorenstein owned the building, 1407 Broadway was managed by Lightstone and Kamber.  

Located between West 38th and 39th Streets in New York City, the building is near multiple transportation hubs, including Grand Central Terminal, Penn Station and the Port Authority. It also sits steps away from central business districts such as Bryant Park, Times Square and Madison Square Garden

1407 Broadway includes more than 37,000 square feet of retail space. Current on-site amenities and retail tenants include Dig Inn, Juice Generation, Luke’s Lobster and a Wells Fargo Bank, according to the property’s website. 

CO previously reported that flexible office provider Knotel signed a lease for around 28,405 square feet across the 25th and 26th floors in January 2019, while Uber used more than 34,600 square feet on the 12th floor in a lease that began February 2018. 

CBRE (CBRE), which represents the office leasing of the building, did not respond to a request for comment on current vacancy numbers. 

Brian Pascus can be reached at bpascus@commercialobserver.com