$234M Non-Performing Loan for Sale

Wednesday, June 12, 2019

Holliday Fenoglio Fowler, L.P. (HFF) has been retained by the seller on an exclusive basis to arrange the sale of a $130,000,000 mortgage loan and a $70,000,000 mezzanine loan (collectively referred to as “loans”). The loans are presently in default and secured by a mixed-use development site located on Manhattan’s premier Fifth Avenue. The property allows for upwards of 354,684 square feet of floor area as-of-right. Based on a July 1, 2019, estimated payoff, the loans have a combined outstanding balance of $234,121,648, which is inclusive of principal, interest and fees owed to lender (subject to further verification).

The loans were originated in June 2017 and structured with an initial term of 18 months, followed by one six-month extension option. Loans individually, and collectively, carry an interest rate of LIBOR + 7.65% and are subject to a default rate premium of 5%. Effective August 31, 2017, loans entered into a technical default, followed by a maturity default on December 31, 2018. Loans continue to accrue interest at a default rate of LIBOR + 12.65%.

The offering provides investors the unique opportunity to acquire non-performing loans of scale that are associated with a property that is fully entitled for future development along Fifth Avenue in Manhattan and within proximity to New York’s Bryant Park and Grand Central Terminal.

Investment Highlights

  • Recourse Obligations:  The loans are subject to certain recourse obligations that are backed by a guarantor with significant holdings and liquidity, providing an investor further comfort in their repayment.
  • Status of Loans Offer an Investor Optionality:  The default status presents investors with the optionality to attempt to modify the current terms to meet their investment parameters, or otherwise pursue remedies.
  • Irreplaceable Real Estate:  The property remains to be one of Manhattan’s last undeveloped parcels of land located along Fifth Avenue, between 42nd Street and Central Park South. Its C5-3 and Special Midtown District zoning, combined with air rights from assigned lots allow for a total buildable area of over 354,684 ZSF with no tower height limits.
  • UCC Foreclosure Sale:  The mezzanine loan structure provides an investor the opportunity to pursue a UCC foreclosure process as a legal remedy for the payment and other defaults related to this asset. This process has been initiated and is dual tracking alongside the note sale.

Parallel to the marketing of the loans, the seller has additionally initiated the UCC foreclosure process with the UCC foreclosure auction scheduled for July 1st, 2019. Upon the successful closing of the subject loan sale, rights as the mezzanine lender would be assigned to the new note holder.

Indicative bids are due Wednesday, June 12. Best and final bids are due Tuesday, June 19. For additional questions and information, please contact Brock Cannon or Stephen Van Leer.

For a listing of other available loans for sale, please click here.

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