Landlord Falls Behind On $55M Loan After WeWork Rejects Greenwich Village Location

Months after WeWork rejected its lease at 57 E. 11th St., the building’s $55M loan has been transferred to special servicing, as landlord Winter Properties has failed to make debt payments for more than two months.

WeWork signed a 15-year lease in 2018 for the entirety of the building’s office space, more than 61K SF, as Winter Properties was renovating the Greenwich Village office building.

It took out a $55M refinancing loan from Citi Real Estate Finance in May 2019, nearly doubling the leverage on the property, Commercial Observer reported at the time. The loan was underwritten at a valuation of $76M, according to loan data platform Cred iQ.

Shortly thereafter, WeWork started to implode, and when the pandemic hit, Winter Properties decided to give the coworking giant a break on its rent payments.

The WeWork lease was modified in June 2021 to include rent abatements and rent credits for August through November of that year, according to commentary in the Morningstar Credit database. The rent abatement burned off, and WeWork agreed to pay the entirety of its rent starting in January 2022.

But the situation became dire for the landlord in November when WeWork filed for bankruptcy and included 57 E. 11th on its list of rejected leases.

The $55M CMBS loan tied to the building was transferred to special servicing in January, according to Morningstar. The most recent special servicer commentary offers little detail, only suggesting that Winter was delinquent on payments for more than 60 days.

The transfer happened because of an imminent default, according to Cred iQ. The building is more than 120 years old and has been owned by Winter Properties, the real estate subsidiary of roofing materials company Standard Industries, for at least 54 years, CO reported.

A WeWork spokesperson declined to comment on 57 E. 11th. A Winter Properties representative didn't immediately respond to a request for comment.

The property wasn't the only one to have its course altered by the pandemic and WeWork’s bankruptcy.

More than $2.5B of CMBS debt was exposed to the initial 69-building list of WeWork lease rejections. As the bankruptcy has progressed, WeWork has exited roughly 90 locations, a spokesperson previously told Bisnow. 

The company has vacated nearly 9M SF nationwide since 2016, more than 3M SF of which has been leased to other tenants, according to CoStar data. A WeWork spokesperson said the company has renegotiated leases at 80 locations since the fall.