Nightingale Losing Its Grip On Another Philly Property As Lender Looks To Foreclose Or Sell Loan
As Nightingale Properties' reputation crumbles, its Philly portfolio is unraveling as well.
The New York-based firm is in payment and maturity default on the $161M loan backing 1500 Spring Garden, a 1M SF building with office and data center tenants, according to a JLL sale listing for the nonperforming loan. Lender TPG Real Estate Finance Trust put the debt up for sale as a nonperforming loan in May, Green Street reports.
Nightingale purchased the massive 1500 Spring Garden St. in 2013 before refinancing it in 2018 with a $190M loan from TPG, Commercial Observer reported at the time. Wafra Capital Partners, now InterVest Capital Partners, owns a portion of 1500 Spring Garden as well.
In addition to putting up the loan for sale, TPG has initiated the foreclosure process against Nightingale, according to JLL's listing. TPG and JLL declined to comment; Nightingale didn't respond to a request for comment.
The loan has had $26M of its principal paid down by a combination of cash from Nightingale and cash flow from 1500 Spring Garden, JLL's listing said. The $161M balance is split between a $121M senior loan and a $40M mezzanine loan, with a combined debt yield of 7.9% and a debt service coverage ratio of 0.8 from in-place cash flow.
The 1500 Spring Garden loan, with interest-only payments at a rate of Libor plus 4.7%, carried an initial term of two years with three 12-month extension options, all of which have been exercised, JLL's listing said. The final extension pushed its maturity back to Sept. 9.
The building was 77% leased with a weighted average lease term of over five years as of March 31, per JLL's listing. About 40% of its square footage is occupied by data center tenants, with a further 19% dedicated to media studios. In a market where office buildings are struggling to find interest even as distressed assets, the mix of uses could add some appeal to a debt buyer looking to take possession.
Nightingale already lost control of its largest Philly holding when the 2.2M SF office complex at 1500 Market St. was placed in receivership in April. Its financial troubles run deeper than that, as CEO Elie Schwartz has been accused of making off with millions of dollars raised through crowdfunding platform CrowdStreet for the acquisition of an Atlanta office building that never closed.
Nightingale owns two other Philly properties, also with InterVest: 1635 Market St. and 1835 Market St., which contain more than 1M SF of offices between them. Nightingale refinanced the properties together with a $165M floating-rate loan from KKR in 2018, Commercial Observer reported at the time. KKR didn't respond to questions about the status of the loan by press time.
