Finance  ·  CMBS

Hilson Management Secures Extension for 385 Fifth Avenue’s $33M CMBS Loan

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Hilson Management Corporation has sealed a three-year loan extension for its office property at 385 Fifth Avenue, Commercial Observer can first report. 

Iron Hound Management’s Christopher Herron and Kevin Thompson negotiated the modification on behalf of the borrower. 

SEE ALSO: Bank OZK Supplies $62M Construction Loan for Lower Manhattan Apartments 

The $32.7 million commercial mortgage-backed securities (CMBS) loan had a maturity date of June 5, 2023, and transferred to special servicer CWCapital Asset Management ahead of that date. 

An extension agreement was reached earlier this month, but a crucial proactive approach to the upcoming loan maturity was taken well in advance as interest rate hikes made refinancings extra challenging across the industry, Jeremy Schwalbe, a co-president at Hilson, told CO. 

“We had a loan coming due in the second quarter of this year,” Schwalbe said. “We decided that we had to get ahead of the problem so we contacted Chris [Herron], we engaged Iron Hound, we put ourselves in special servicing and then we worked openly with CWCapital on a resolution.” 

WeWork previously leased roughly 22,000 square feet across three floors at the building. Hilson had been communicating with the coworking giant on a termination agreement at the property, and worked with it on its exit before re-leasing two of its floors to tenants that previously occupied the WeWork space. 

“Their floors were gorgeous — just beautiful, beautiful, floors,” Schwalbe said of the former WeWork space.  

Additionally, sponsorship invested new cash into the building to ensure it was adequately capitalized for the future. 

Schwalbe represents the third generation of his family to lead Hilson, and the firm has always taken a family approach to its portfolio, which he said puts them in good standing with tenants when the market is tough. 

“We know all of our tenants, we know all of our workers, and we know everyone who comes in and out of the buildings,” he said. “Also, all of our properties are within a 10-block radius,” 

The firm’s vacancy rate across its office portfolio is the single digits today, Schwalbe said. 

“We work with our tenants,” he said. “By way of example, we have over 200 tenants for multiple properties and at the beginning of COVID we literally took the portfolio and split it between every executive and said, ‘OK, how are we going to get through this?’ And we did, by working with our tenants, our bankers and several others.” 

Schwalbe noted there’s strong market momentum in New York City right now, with lots of leasing activity. He pointed to Amazon underscoring its commitment to the city by moving into Lord & Taylor’s historic Fifth Avenue flagship store just a couple of blocks from his property, and the full return of tourism during the holiday season. Additionally, the Fed meeting this week brought an extra dash of festive cheer. 

“We’re very happy that the Fed is holding rates. That’s hopefully going to bring lenders back to the playing field,” Schwalbe said

Schwalbe said he was very happy to achieve a resolution for the CMBS loan, and that CWCapital was both responsive and communicative throughout the process. 

Cathy Cunningham can be reached at ccunningham@commercialobserver.com