Blackstone is taking a rare hit, handing over the keys to its Midtown office building at 1740 Broadway.
A $308 million loan on the 26-story property has been transferred to special servicing, the Commercial Observer reported. Typically, handing back the keys results in the special servicer acquiring the title via deed-in-lieu of foreclosure.
The special servicer can then either begin exploring foreclosure or work on loan modifications with the borrower; Blackstone is reportedly looking at loan resolution options.
Deutsche Bank originated the loan as part of a CMBS single-asset, single-borrower transaction in November 2015 before it ended up in the hands of the CMBS trust. Green Loan Services is the special servicer of the loan.
According to the Observer, the loan was put on a watchlist because L Brands’ lease was set to expire at the end of March; the company was leasing 418,000 square feet of the 621,000-square-foot building. L Brands decided to downsize and relocate to 55 Water Street at the start of the pandemic.
Prior to that, Davis & Gilbert also left the building, Considered a top tenant at 1740 Broadway, the law firm moved to Rudin’s 1675 Broadway in September 2019.
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Despite the struggles at the Midtown office building, Blackstone is not ready to sow doubt in its other New York City office properties, which make up less than 1 percent of the company’s global portfolio.
“This asset faces a unique set of challenges, and we are working diligently to find a solution that is in the best interests of all parties involved, including our investors and lender,” a Blackstone spokesperson told the Observer.
Blackstone acquired 1740 Broadway from Vornado Realty Trust in 2014 for $605 million. The 26-story building is located between West 55th and 56th streets.
The struggles of one Manhattan building aren’t entirely scaring Blackstone away from the city office market. Last week, the firm bought a 49 percent stake in One Manhattan West from Brookfield and the Qatari Investment Authority. The deal values the 67-story office building at $2.85 billion.
[CO] — Holden Walter-Warner