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Extell’s Belnord no longer in distress

Also off the troubled properties list: Kushner's 666 Fifth Avenue

Extell Development’s Belnord and Kushner Companies’ 666 Fifth Avenue both made it off Trepp’s list of distressed properties for January, according to data prepared for The Real Deal by the research firm today, while an 144,000-square-foot office and retail building owned by private investors at 2 West 46th Street made it onto the list for the first time.

The $375 million loan on the Belnord, which has 215 rental apartments spanning the entire block from 86th to 87th streets between Amsterdam Avenue and Broadway, has been in financial trouble since Extell President Gary Barnett put more debt on the historic building than its rental income could support, according to news reports. He stopped paying his sizable debt service on the Belnord in May 2011; it was reported in August that he could wind up walking away from it, a prospect that alarmed longtime tenants.

But the loan, which Trepp reported as 90 days delinquent in December, is now current, according to the most recent data. A reason for the change was not given.

Barnett declined to comment on the data, but a spokesperson for Trepp speculated that a loan modification may be on the agenda for Extell.

“The total reserve balance in the loan periodic file is down significantly, so it looks like they may have liquidated reserves to make all the past due payments,” the spokesperson said. “It’s generally a requirement of closing on a loan modification for the borrower to bring the payments up to date. However, it’s difficult to speculate on a modification given that there wasn’t any mention in the latest commentary.”

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Kushner meanwhile, completed a well-publicized refinancing of its mammoth tower at 666 Fifth Avenue with Vornado Realty Trust late last year. Vornado is injecting $80 million of equity into the project in return for a 49.5 percent stake in the tower, while Kushner will also contribute $30 million to the refinancing.

Under the agreement refinancing agreement, the tower’s senior debt will be reduced to $1.1 billion from almost $1.22 billion. The equity contributions will cover the costs of leasing the 30 percent of the building that’s currently vacant.

The building at 2 West 46th Street, a 141,645-square-foot property owned by a group of private investors, was among a total 51 properties on the distressed list. The Diamond District property is currently on the market for $80 million but has an outstanding loan amount $46 million, according to Trepp’s data.

One of the brokers marketing the property said there was no cause for concern.

David Schechtman, executive managing director at Eastern Consolidated, who is marketing the building with colleagues Lipa Lieberman and Marion Jones, said that it was “outlandish” to consider the property a distressed asset.

“The value of the asset far exceeds the debt,” he said. “We have two very attractive options. One is a sale at a wonderful price and the other is a handsome refinancing. This is not going to wind up one of those lost building type deals — these are well-heeled owners.”

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