Metropole’s Loan at 681 Fifth Avenue Falls into Delinquency

Metropole’s $215 million loan at 681 Fifth Avenue has fallen delinquent, according to Trepp, a fresh reminder that even prestigious commercial corridors are feeling the industry’s headwinds.

But 681 Fifth’s troubles trace back to 2019, before the pandemic when it lost Tommy Hilfiger’s flagship as a tenant.

Losing Hilfiger was no small thing. The fashion designer was not only Metropole’s largest tenant at the Fifth Ave property, occupying 27 percent of the 82,573 square feet, but represented 77 percent of the total annualized base rent when the mortgage was securitized.

Fortunately for Metropole, according to its CEO, Robert Siegel, Tommy Hilfiger continued to pay its rent in full until the lease expired on May 31 of this year. But that meant the landlord did not have access to the space until then and could not renovate and market it. Since then Metropole has spent about $350,000 renovating the location, which is listed with JLL.

A number of CEOs of major brands have since walked through the space, Siegel said in a phone interview.

Metropole acquired the property in 2005 for $86 million from Fortunoff, a New York-based furniture and jewelry retailer. The building is between East 53rd and East 54th streets, one of the priciest stretches of retail real estate on the planet.

Metropole’s $215 million CMBS loan came from a 2016 refinancing of the office and retail building by UBS and Citigroup. The loan, which matures in November 2026, replaced a $125 million Ladder Capital loan that was scheduled to mature in 2018.

In the fateful year of 2008, the landlord had landed a $130 million loan on 681 Fifth from German lender Hypo Real Estate Capital, which soon got caught up in the mortgage crisis. In 2010, Ladder Capital jumped in as the building’s lender.

When Metropole finished a renovation in 2009, its tenants included Hilfiger, Vera Bradley and MCM Worldwide.

Correction: This article has been revised with comments from Metropole CEO Robert Siegel and to clarify that Tommy Hilfiger continued to pay rent at 681 Fifth Avenue through May 2023.