$265M CMBS Loan Backed by Metro Loft’s 180 Water Street Headed to Special Servicing
Developer Nathan Berman bought 460,000-SF office in 2017 and converted it into 573 apartment units
By Brian Pascus December 9, 2024 12:25 pm
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Another one of Nathan Berman’s prized Manhattan office conversions is headed for special servicing.
The $265 million commercial mortgage-backed securities (CMBS) loan secured by 180 Water Street, a former Manhattan office building that has been converted into a luxury rental apartment, is “likely [to] transfer” to special servicing due to a maturity default, according to an alert from Morningstar Credit.
The $265 million loan — part of the BMARK 2019-B14, CF 2019-CF3 and COMM 2019-GC44 conduit deals — failed to pay off at its November 2024 maturity, despite holding an occupancy rate of 98 percent in June, according to Morningstar Credit.
180 Water Street is owned by Berman’s Metro Loft Management, which took control of the 573-unit, 460,000-square-foot building in 2017 after buying out Vanbarton Group for $450 million. Berman’s firm had bought a minority stake in the building in 2014 and embarked on a $100 million plan to convert the property from an aging office building into a luxury rental residence beginning in 2015.
Vanbarton Group purchased 180 Water Street for $151 million in July 2013.
CO reported five years ago that Berman secured a $265 million CMBS loan from Deutsche Bank that included an additional $100 million mezzanine loan controlled by Rockwood Capital. CO reported at the time that Rockwood secured an annual interest rate of 8.3 percent on the interest-only mezzanine loan, while the five-year, interest-only senior debt paid 3.4 percent interest.
A September 2019 appraisal valued 180 Water Street at $451.5 million. Since COVID-19, the value of office buildings nationwide has plummeted, largely due to changing work-from-home patterns and billions of dollars worth of loans refinancing into a higher interest rate environment.
Rents at 180 Water Street remain high, with studios going for $4,095, while one-bedrooms rent for as much as $6,295, per StreetEasy.
This is the second one of Berman’s Financial District office conversions that has hit a rough patch in 2024.
20 Broad Street — a 29-story, 470,000-square-foot tower, built in 1956, that Metro Loft converted into a 533-unit residential property — saw its $250 million CMBS loan hit special servicing in August, per CO. Crain’s reported a modification is now in the works.
Berman is considered a pioneer in the office-to-residential conversion marketplace and remains active with several projects in Manhattan.
CO reported in March that Berman announced the largest U.S. conversion to date: the redevelopment of the 33-story, 672,462-square-foot former Pfizer headquarters at 235 East 42nd Street into about 1,500 apartments.
He’s also spearheading deals with Silverstein Properties to convert 55 Broad Street, a 30-story office building, into apartments, as well as convert the 1.1 million-square-foot office tower at 25 Water Street into residences.
Metro Loft did not respond to requests for comment.
Brian Pascus can be reached at bpascus@commercialobserver.com
