The Chetrit Group ran into trouble on a $481 million loan last year, but the developer says it has made progress on the debt and intends to pay off the balance in a few months.
The loan, originated by JP Morgan Chase, financed the 2018 acquisition of a national multifamily portfolio that included 43 properties in New York, the Sun Belt and parts of the Midwest.
Chetrit faced default last year when below-average occupancy rates dented revenue streams and the interest rate on its adjustable-rate loan shot up. The firm failed to pay off the loan when it came due last year, a Trepp report found.
But the developer is moving on several fronts to address the delinquency. In November, the firm paid down $100 million, bringing the balance to $381 million, a spokesperson said. And Chetrit says it is in contract to sell 12 buildings in the portfolio to reduce it further.
The developer will offload properties in Memphis, Florida, Indiana, and Ohio in a sale it said should bring in $175 million. It expects the deal to close in 90 to 120 days.
A spokesperson declined to comment on what the loan balance will be once that sale closes. Rough math suggests that it would be just above $200 million.
Read more
Commercial
New York
Struggling with $481M loan, Chetrit looks to sell national portfolio
Commercial
San Francisco
Veritas in default on $450M commercial loan
New York
Vultures circle as distress looms for commercial real estate
To pay off the remainder, Chetrit is working with special servicer Situs on a forbearance agreement. Terms have yet to be finalized, but a spokesperson said Chetrit spoke with Situs last week to nail down the details.
All told, Chetrit projects that the loan’s remaining balance will be paid off in three to four months through equity, refinancing or property sales, or some combination of the three.