L&L, Mitsubishi Default On $93M Plaza District Office Loan
The owners of the office portion of Metropolitan Tower in the Plaza District of Midtown Manhattan have reportedly stopped making payments on their mortgage, and the lender is looking for an exit, The Real Deal reports.
L&L Holding Co. and Mitsubishi Corp. own the 18-story commercial condo in the Macklowe Properties-developed 142 West 57th St., which backs a $92.5M loan from Aereal Capital Corp. Those owners are now in default, although it is unclear what prompted their decision to stop making payments, per TRD.
The rest of the 68-story mixed-use Metropolitan Tower is made up of residential condominiums, and a penthouse unit is now for sale for $8.5M, per StreetEasy.
L&L, run by Rob Lapidus and David Levinson, acquired the office condo in 2006, paying BlackRock an unknown figure. Ten years later, Mitsubishi Corp. bought over 98% of the equity in the office portion through a fund run by GreenOak Real Estate, and the joint venture took out a $100M loan with Aareal to finance the deal, TRD reported.
That loan was refinanced with a $92.5M, floating rate interest-only loan in 2021, which is now the subject of the default. The rate of 300 basis points above Libor goes up 300 points upon default, per TRD.
Lenders have said they are no longer willing to accommodate borrowers in the same way as they had through the pandemic as interest rates have risen dramatically. Office assets have gotten significant attention as vacancies hit record highs and demand for space remains sluggish.
More than $16B of loans backed by New York City commercial real estate are set to mature in 2023, and defaults are starting to pile up.
In February, GFP Real Estate defaulted on a $103M loan it owes on a Midtown East office tower, although a month later the landlord announced it had closed on a three-year loan extension on the property. As part of the extension deal, GFP Real Estate said it had “committed significant new equity for future leasing and tenant improvement needs.”
In February, Columbia Property Trust defaulted on a $1.7B loan backing a seven-building office portfolio across four states, including multiple Manhattan buildings. Brookfield real estate fund this month defaulted on a loan it secured in 2018 for a dozen office buildings, largely in the D.C. suburbs.
Tishman Speyer’s $485M loan on a billion-dollar Park Avenue office property was sent to special servicing after the landlord opted to get ahead of an upcoming maturity, for which it said it was at risk of "imminent default."
