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BXP-Moinian Hudson Yards JV Seeks New Capital After Default On Loan Held By BXP

An $80M loan that BXP provided to a joint venture in which it holds a stake is in maturity default, and the partnership is now looking elsewhere for funding.

BXP, formerly known as Boston Properties, and partner The Moinian Group own the site of 3 Hudson Blvd., a planned office skyscraper in Hudson Yards. BXP originated an $80M loan to the venture when it came on as a partner in 2018, but the loan matured Aug. 7 and still hasn't been paid off, according to a regulatory filing.

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The empty lot at 3 Hudson Blvd. as of September 2024, surrounded by recently built office towers in Hudson Yards.

The loan now has a $120M outstanding balance, according to BXP's supplemental quarterly earnings report filed Tuesday with the Securities and Exchange Commission. It carries a 12.5% interest rate, which is likely the default rate — the company reported the loan had an 8.9% interest rate as of June 30, before it matured.

The REIT, the largest publicly traded owner of office buildings in the country, is now looking to refinance the loan it gave itself and Moinian with a third party as the partners try to keep the long-stalled 3 Hudson Blvd. project alive. BXP estimates its equity value in the project, a 25% ownership stake, at $114.2M.

“As the capital market environment has improved, we have elected to pursue third party financing to replace the existing mortgage loan for 3HB that BXP originally provided,” a BXP spokesperson said in a statement. “We are working closely with our partner to finalize new capital for the project.”

BXP partnered with Moinian on the planned development of a 53-story Hudson Yards office tower in 2018, committing the financing, which replaced a land loan of the same amount from American General Life Insurance Co., The Real Deal reported at the time. 

Joseph Moinian first purchased the site from Verizon in 2005, spending $54M, and an office development has been in the works since at least 2013. The lot occupies a full city block between West 34th and 35th streets, adjacent to the Javits Center.

Following a redesign that reduced the 2M SF building’s height, construction began in 2017, according to New York YIMBY. But it stalled in early 2020. YIMBY reported it to still be on hold in late 2023. A Google Maps view shows little difference as of November.

The developers have been marketing the project to prospective tenants but haven't struck any deals yet. As of last spring, BXP and Moinian were asking prospective anchor tenants to pay as much as $200 per SF in office rents, more than twice the Manhattan average, the New York Post reported.

A representative for Moinian didn't respond to Bisnow’s request for comment.

The filing was part of BXP’s fourth-quarter and 2024 full-year earnings report, released Tuesday. 

The Boston-based REIT reported its best quarter of signed leases since 2019, but the company also showed how much weakness remains in the office market. It wrote down the value of three of its properties owned in joint ventures by more than $340M and projected occupancy and cash flow would dip this year from 2024.

BXP’s earnings for the quarter were in line with Wall Street’s consensus, with its Q4 revenue of $858.6M, an increase of 3.6% year-over-year, beating the estimate of $854M. Its funds from operations, a metric used to measure a REIT's cash flow, dipped to $284M in Q4 from $286.2M a year earlier.

Its share price dropped nearly 6% in trading Wednesday.