CMBS Loan on 601W Companies’ 410 Tenth Avenue Hit With Cash Management Clause
A lease termination request from First Republic has triggered the action on the Hudson Yards office property.
By Andrew Coen November 10, 2023 3:24 pm
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A lease termination request has triggered a cash management clause for the $565 million commercial mortgage-backed securities (CMBS) loan backed by 410 Tenth Avenue, an office property in Manhattan’s Hudson Yards, Commercial Observer has learned.
“The master servicer is now controlling the revenue/cash as a form of protection to the bondholders,” Mike Haas, founder and CEO of CRED iQ, told CO.
The 601W Companies, which acquired the 20-story building in late 2020 from SL Green (SLG) for $953 million, lost full control of the property’s cash flow after First Republic Bank (FRCB) began looking to terminate its lease well before its 2036 expiration, according to servicer data from CRED iQ. First Republic is the second-largest tenant in the 631,944-square-foot property, comprising 33 percent of its gross leasable area.
First Republic was sold to JPMorgan Chase (JPM) in May during the height of the 2023 regional banking crisis.
The Federal Deposit Insurance Corp. (FDIC) terminated First Republic’s lease at 410 Tenth Avenue within the last 10 days after working on a termination agreement since late September, Bisnow reported Friday citing an unidentified 601W executive. JPMorgan never took ownership of the property after acquiring many of First Republic’s assets from the FDIC in May.
The seven-year, fixed-rate $705 million debt package on 410 Tenth Avenue was originated in December 2020, and comprised a $565 million senior CMBS loan from JPMorgan plus $140 million of mezzanine debt. At the time, 601W had taken over a $600 million construction loan that SL Green Realty closed in September 2020 for the property with lenders Goldman Sachs and Wells Fargo, two years after the landlord acquired the asset from the Kaufman Organization for $440 million.
The current CMBS loan is scheduled to mature in 2032, according to CRED iQ data.
If First Republic Bank were to stop paying rent, the property would lose $21.2 million and property revenue would be cut from $60 million down to $38.8 million, according to Haas. Amazon (AMZN) is the building’s largest tenant, comprising 53 percent of gross leasable area in a lease that runs through May 2037.
Officials at 601W did not immediately return requests for comment.
Andrew Coen can be reached at acoen@commercialobserver.com
