Santander Bank Files To Foreclose On 1,200-Unit Apartment Portfolio
In its second action against prominent New York City landlord A&E Real Estate Holdings in a matter of weeks, Santander Bank has moved to foreclose on a 1,268-unit portfolio.
In court records, Santander alleges that the landlord has defaulted on a $165M loan linked to 12 properties in Queens. The filing was first reported by PincusCo.
Signature Bank originated the loan in January 2021. After the bank collapsed in March 2023, Santander bought a 20% equity stake from the Federal Deposit Insurance Corp. in a $9B loan book entirely backed by rent-stabilized and rent-controlled housing, which included the A&E loan.
At the time, the loan book was described as “toxic waste” as New York rent reforms passed in 2019 caused the value of rent-regulated properties to plummet as much as 60%. Balance sheets shared with Bisnow by property owners show that inflation and property improvement needs have made it increasingly difficult to cover debt payments.
Since the beginning of 2024, lenders have filed nearly 500 preforeclosure actions totaling $4.8B tied to nearly 25,000 apartments in New York City, according to a PincusCo analysis.
Under the mortgage agreement, A&E was scheduled to pay interest on the loan starting in March 2023 until February 2026. Santander alleges that A&E failed to make certain interest payments, along with tax escrow and water and sewer payments.
As of September, A&E owed nearly $9.8M of the principal balance, almost $3M in interest, $1.7M in tax escrow payments and $5M in outstanding water and sewer bills, according to the complaint, filed Wednesday.
In the lawsuit, Santander seeks to accelerate the entirety of the loan, making the entire nine-figure sum due immediately.
In a statement to Bisnow, A&E said it is “working diligently” with Santander and its joint venture with the FDIC, which was appointed as receiver in the immediate aftermath of Signature’s collapse.
“Despite the widely reported difficulties facing rent-stabilized properties throughout New York City, we are offering to put new equity into these buildings and keep investing in them to ensure our residents benefit from safe, comfortable and well-maintained homes,” a spokesperson for A&E said.
A&E added that there is a meeting scheduled with the bank and the federal agency in the coming days.
“We hope it will yield a resolution that serves the best interests of everyone involved, most especially the hardworking New York City residents who call these buildings home,” the spokesperson said.
Santander declined to comment.
The filing follows another preforeclosure action filed Sept. 19 by Santander against A&E. In that case, the landlord is accused of defaulting on a $43M loan, also originated by Signature, tied to a 126-unit rental building at 400 E. 58th St. in Manhattan.
A&E, which owns more than 10,000 NYC apartments, is also facing foreclosure on a 31-property portfolio with more than 3,500 housing units. It spans 53 buildings across the city and is backed by a $506.3M CMBS loan and a $93.7M securitized mezzanine loan.
