Chetrit Restructures $714M CMBS Loan on Upper East Side Resi Towers

What’s up, Upper East Siders? 

A sizable commercial mortgage-backed securities (CMBS) loan restructuring on two residential buildings, that’s what. 

Chetrit Organization just sealed a loan modification for Yorkshire Towers at 305 East 86th Street and Lexington Towers at 160 East 88th Street, Commercial Observer can first report. 

The restructuring, negotiated by Iron Hound Management’s Anthony D’Amelio, brings the CMBS loan current, waives guarantees, and extends the loan’s maturity date, sources familiar with the modification said. The loan’s updated maturity date couldn’t be gleaned. 

The debt comprises a $539.5 million CMBS loan plus $174.5 million in mezzanine debt. 

The modification agreement, finalized with Rialto Capital, as well as subordinate debt holders — including two domestic mezzanine lenders and two Korean mezzanine lenders — was sealed after months “of hard work and collaboration,” according to a statement by Michael Chetrit, principal of the Chetrit Organization, with parties focused on aligning the deal’s financial structure with the buildings’ operational needs with a view to stabilization. 

“We appreciate the lender’s willingness to work through this process with us,” Chetrit said. “This modification allows us to continue investing our time and resources into enhancing and stabilizing the property, ensuring it reaches its fullest potential.” 

Yorkshire Towers is a 21-story apartment building, while Lexington Towers is a 15-story apartment building. Approximately 277 of the two buildings’ 804 units (roughly 35 percent) are rent-stabilized. 

The towers’ senior loan was originated by Citigroup, BMO Capital Markets, Starwood Property Trust and MF1 Capital in May 2022, and later securitized in the CGCMT 2022-GC48, BBCMS 2022-C16, BBCMS 2022-C17, BMARK 2022-B36, BMO 2022-C2 and BMO 2022-C3 conduit deals. Its original maturity date — now extended — was June 2027.

Last December, The Real Deal reported that the CMBS loan had been sent to special servicing amid struggles to make necessary improvements to get its rent-stabilized units up to code following caps on rent increases put in place by New York City’s 2019 rent law. 

Now that the loan restructuring is complete, improvements will be made to the buildings’ operations and performance, readying them for their next chapter.

“Iron Hound Management is proud to have advised the Chetrit Organization in successfully navigating this complex restructuring,” Iron Hound’s D’Amelio said in a statement. “Michael Chetrit’s expertise and strategic approach enabled us to deliver a seamless and efficient result for our client.” 

Rialto Capital declined to comment. 

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