The Kushner Companies’ $285 million loan on its big Times Square retail property will have to be reworked after tenants at the property broke their leases.
The securitized loan managed by Wells Fargo will be sent to a special servicer to oversee negotiations, according to Bloomberg. Debtwire first broke news of the impending transfer.
Rental income for the retail condo at 229 West 43rd Street has fallen short of interest payments as months of tenant financial troubles have caught up with the Kushner Cos.
“Everyone is aware of the fact that the retail environment is very challenged to say the least,” a spokeswoman for the company told Bloomberg. “The main tenants representing a big percentage of the rent roll defaulted on their lease obligations, which necessitates a workout.”
Kushner Cos. bought the retail property, which spans six floors at the base of the old New York Times building, for $296 million in 2015. The company got a $470 million appraisal of the property after leasing to new tenants, and refinanced the real estate with a $370 million loan package, including $285 million from Deutsche Bank.
Kushner Cos. cashed out $59 million in the refinancing and Deutsche sold its portion of the debt into the commercial mortgage backed securities market.
The company defaulted on a smaller, high-interest traunch of the debt in October, according to a recent analyst note. The larger $285 million portion of the note is not in default and has not yet moved to special servicing.
Amid a choppy retail environment, several of Kushner’s tenants have faced trouble. An experiential exhibit from National Geographic has asked for a rent reduction. And the Gulliver’s Gate attraction filed for bankruptcy in October after only paying its rent intermittently. [Bloomberg] — Rich Bockmann