With Auction Looming, Savanna Working With Lender To Sell 521 Fifth
The owner of a troubled 39-story office tower near Grand Central is hoping to sell the building and avoid a foreclosure auction that has already received court approval.
Savanna is working with special servicer LNR Partners to sell 521 Fifth Ave., a nearly 500K SF office and retail building developed in 1929, more than a year after the landlord defaulted on its CMBS loan at the property.
Wells Fargo, acting as a trustee on behalf of 521 Fifth’s CMBS bondholders, filed a preforeclosure claim in November 2024, alleging that Savanna owed $242M plus interest.
New York County Supreme Court Judge Milton Tingling granted the lenders a default judgment in August and appointed attorney Ronald Zezima as the sale referee. With default interest accumulating, the debt on the building had grown to $259M by that time, according to court documents.
There is no auction date yet in place while Savanna and its lenders work out a sale, Zezima told Bisnow in a phone call. He declined to give additional details but described the sale as “amazing.”
“It’s not often you see a big office building foreclosed on like this,” he said.
Savanna and Wells Fargo didn't respond to Bisnow's requests for comment. LNR declined to comment.
Savanna paid $381M to acquire the building in 2019 from SL Green and took out the CMBS loan to finance the acquisition. The loan was originally set to mature in 2021, but Savanna executed a series of one-year extensions until defaulting at final maturity in June 2024.
Occupancy had fallen from 93% when the loan was issued to 77% in August 2024 when it was sent to special servicing. As of June, the occupancy rate had fallen further to 68%, according to servicer commentary via the Morningstar Credit database.
Further clouding the property's future is the lease of its largest tenant — apparel retailer Urban Outfitters, which has a 26K SF, two-story storefront — is set to expire in February, according to servicer commentary. Upscale gym chain Equinox also occupies 26K SF, with a lease that doesn't expire for another decade.
But with resurgences in both the Manhattan office and retail markets, and 521 Fifth's prime location between Grand Central Terminal and Bryant Park, Savanna and LNR likely have no shortage of suitors for the tower.
Manhattan’s Grand Central submarket has one of the tightest availability rates in the city at 13.6% compared to the city’s overall 16.2% rate, according to Savills' Q3 office report. The borough overall is tracking to hit 40M SF of leases signed for the first time since 2019, according to Colliers.
Savanna, the Manhattan-based investment and development firm run by Chris Schlank and Nicholas Bienstock, has been the victim and beneficiary of the distress still coursing through the market.
It forfeited its stake in the office tower at 110 William St. in 2023 and in August lost a new office tower it developed in Brooklyn to foreclosure.
But this year, it acquired the leasehold for 440 Madison Ave. in a short sale for $50M and acquired the leasehold for 430 W. 15th St., The Real Deal reported. Last November, it bought the trophy office building at 799 Broadway, also in a short sale.
Savanna has also recovered a building from the brink of foreclosure. After defaulting on its $463M CMBS loan tied to 5 Bryant Park this summer, it struck a deal last week to refinance and reinvest in the tower with $510M in new debt from Blue Owl and King Street Capital Management this week, Commercial Observer reported.
