A 25 percent cushion wasn’t enough to save what was once one of Soho’s most expensive retail properties.
The roughly 6,000-square-foot retail space at 106 Spring Street, which has sat largely empty for years, is heading to foreclosure. Owner SL Green Realty bought the property in 2019 from 60 Guilders and Carlyle for $79.5 million — a steep discount from the $105.4 million those investors paid three years earlier.
Lender Citizens Bank scheduled a UCC foreclosure auction for SL Green’s interest in the property as well as one nearby at 133 Greene Street, according to marketing materials and sources familiar with the properties.
Eastdil Secured is marketing Citizens Bank’s interest in the properties at the foreclosure auction, which is scheduled for December. Representatives for the brokerage declined to comment.
A spokesperson for SL Green declined to comment and representatives for Citizens Bank, headed by CEO Bruce Van Saun, did not immediately respond to a request for comment.
Situated at the corner of one of Soho’s most heavily trafficked intersections, 106 Spring Street was one of the neighborhood’s most expensive retail deals ever when hotshot investors Kevin Chisholm and Bastien Broda of 60 Guilders bought the co-op unit with the Carlyle Group in 2016.
By then, however, many believed the bottom had fallen out of the luxury retail rental market. Tenants were balking at the high rates investors were asking in order to justify the large checks they were writing to acquire properties. SL Green, which had lent to 60 Guilders and Carlyle, bought it from them last year for nearly $80 million, or roughly 25 percent off of what they paid.
The trajectory from record-setter to foreclosure is one of the biggest boom-to-bust stories in Soho, and could be a precursor to what many believe will be a wave of distress to come for high-street retail.
A UCC foreclosure action allows a lender to take over a defaulted borrower’s equity interest in a property, rather than the way a borrower would foreclose on the property itself. It’s often a much quicker process than a traditional foreclosure and has become more prevalent, especially as the coronavirus pandemic has tipped many struggling properties into default.
It’s not clear how large Citizen Bank’s mezzanine position is in the two properties, which are the retail components of Soho co-op buildings. The properties at 106 Spring and 133 Greene streets carried a combined $53.5 million in senior and mezzanine debt as of late June, according to SL Green’s second-quarter financials.
SL Green took control of both properties in 2018 and 2019 for a combined $110 million from 60 Guilders and Carlyle, which used the properties as collateral for loans provided by the REIT. SL Green notes in its financials that it acquired the properties through “negotiated transaction[s]” with the sponsors.
The 106 Spring Street loan has an original maturity date of January 2021, and 133 Greene Street’s original maturity date was listed as this past August, according to SL Green’s financials.