For the second time in three months, the Chetrit Group fell behind on a $225 million loan covering 640 multifamily units in Jamaica, Queens. That mortgage comes due in July.
The loan servicer previously marked the Parkhill City debt, backed by 150-11 89th and 152-09 88th avenues, 30 days delinquent in November, according to Trepp.
Chetrit paid off those arrears in December, but didn’t stay current for long. Chetrit is again more than 30 days past due, according to Morningstar data.
The firm’s missed payment was largely responsible for the multifamily sector’s national delinquency rate rising nearly half a percentage point to 2.3 percent in February, according to the rating agency KBRA. Fewer than 1 percent of KBRA-rated rental properties were delinquent in October.
Chetrit was squeezed by occupancy struggles and a floating-rate loan made expensive by the Federal Reserve’s rampant rate increases.
The firm secured the debt from Starwood Capital and BMO in June 2021 to refinance its redevelopment of the shuttered Mary Immaculate Hospital.
Commentary by the servicer noted that Chetrit attributed its payment problems to a difficult lease-up during Covid. The firm wrapped up construction on the larger 17-story building in 2020, the pandemic’s first year, according to Architect Magazine.
Occupancy reached 95 percent in the third quarter of 2022, according to Morningstar. But revenue fell 24 percent below underwriting as taxes and payroll expenses jumped 79 percent.
The developer told its servicer it was also waiting on a tax abatement from a nearby building that should be finished by the middle of this year, according to Morningstar.
When Chetrit picked up the $225 million mortgage, it also scored a $40 million construction loan to build another 107-unit rental building on the former hospital site. Last summer, New York Yimby reported the development at 88-20 153rd Street should be finished by the winter of 2024.
With the Parkhill City loan due this summer, though, Chetrit does not have time on its side.
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A spokesperson for the firm did not immediately respond to a request for comment on what the latest delinquency means for the portfolio.
Last week, Chetrit defaulted on an $85 million loan at a development site in Hudson Yards and late last year, the firm faced default on a $481 million loan backing 43 multifamily properties, nearly a quarter of which it moved to sell.