Yellowstone Snaps Up Loan on 1740 Broadway for Roughly $200M

The firm is mulling a residential conversion of the office building, sources said.

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Kevin Costner would surely be proud.

Yellowstone Real Estate just snapped up the defaulted commercial mortgage-backed securities (CMBS) loan on 1740 Broadway, Commercial Observer has learned. 

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The firm bought the loan on the office asset, which was previously owned by Blackstone, for “just under $200 million,” sources familiar with the trade said. 

The acquisition is just the latest note purchase from Yellowstone, an investment firm led by Isaac Hera, which has racked up turnaround deals in recent months. Yellowstone hit headlines when it bought the $106 million defaulted note on the iconic New Yorker Hotel in September. 

JLL’s Steven Binswanger, Andrew Scandalios, Jennifer Zelko, Drew Isaacson and David Giancola led the note sale, which works out to a purchase price of roughly $300 per foot. 

JLL officials declined to comment. Yellowstone officials could not immediately be reached for comment. 

The 620,928-square-foot office building sits on Broadway between West 55th and West 56th streets. It has spent almost 75 years as an office building, but Yellowstone is now mulling a residential conversion, sources said. 

Blackstone acquired 1740 Broadway in late 2014 for $605 million from Vornado Realty Trust, however, Blackstone handed back the keys to the property in March 2022 after defaulting on its $308 million CMBS loan. 

Deutsche Bank initially originated the loan on the building as part of the BWAY 2015-1740 SASB CMBS deal back in November 2015.

After handing back the keys, Blackstone has moved on from the asset. 

“We wrote this property off nearly three years ago and have now exited this investment,” a Blackstone spokesperson told CO, declining to comment on the note sale today. “These are rare instances in our nearly $600 billion portfolio comprising more than 12,000 assets, and we’re incredibly proud of our performance, which speaks for itself.”

Blackstone has substantially written down its legacy U.S. office investments, and began marking 1740 Broadway in 2017 as U.S. office headwinds started to stir. The CMBS loan on 1740 Broadway sat in special servicing for more than two years, with Blackstone not making any payments on the building since its transfer, sources familiar with the asset said. 

Cathy Cunningham can be reached at ccunningham@commercialobserver.com.