APF Delinquent On One Office Building Loan, Struggling With 2 Others
APF Properties is reportedly in hot water with loans on three office properties where WeWork has been a tenant, making it the latest landlord to be hit by a cocktail of economic challenges and issues surrounding the coworking firm.
APF, led by Kenneth Aschendorf and Berndt Perl, has $423M in debt backed by three office properties, The Real Deal reports.
At 183 Madison Ave. the landlord is more than two months late on a $173M loan, according to TRD. The loan matured in September.
Meanwhile, the properties at 28 West 44th St., known as the Club Row Building, and 25 West 45th St. have drawn the attention of ratings agencies. The $70M loan at 25 West 45th St. was flagged as a “troubled loan” by Moody’s in June. Last month, the Club Row building’s $180M debt was put on a watchlist by Morningstar as an elevated default risk, according to TRD.
APF paid $220M for 183 Madison Ave. in 2018 and then rented 12% of its space to WeWork in 2019. When WeWork began to fall behind on its rent, APF modified the lease, removed $4.3M from what it owed and exercised its loan extension options three times.
In April, WeWork was up to date on its rent, Morningstar reported, but amid heightened interest rates, the cash flow at the property wasn't covering the debt. The 183 Madison location is listed as closed on Google.
At Club Row, WeWork takes up 7% of the building, but overall occupancy at the building is 69% and the loan is due in 14 months.
At the West 45th Street property, WeWork previously occupied 13% of the building, but it reached an exit agreement in January, TRD reported. It was watchlisted in February but was already facing challenges and was 82% occupied at the end of 2022.
WeWork declined to comment.
This year has been a difficult one for office landlords. At the beginning of the year, Trepp tracked roughly $16B in CMBS maturities expected to hit NYC in 2023.
Many of those owners have since been able to extend their loans in hopes that interest rates will be more favorable next year. But individual buildings have faced challenges. This week, a $34.9M mortgage tied to 252 West 37th St. in Manhattan's Garment District, went to a special servicer, according to commentary in the Morningstar Credit database.
WeWork has caused some problems at certain buildings too. At 1440 Broadway, where WeWork is the largest tenant, CIM Group and Australian pension fund QSuper appear to be on the verge of handing over the keys.
