Owners Of 15 Central Park West Retail Face Foreclosure On $125M Loan
A group of high-profile real estate investors are facing foreclosure after defaulting on their debt backing the retail space at the base of the luxury condominium 15 Central Park West.
Fortress Investment Group, Global Holdings Management Group, Zeckendorf Development and Madison Capital have been served a pre-foreclosure notice in New York State Supreme Court by LNR Partners, which is the special servicer on a $125M loan provided to the joint venture backing the retail condominium, PincusCo reports.
The loan matured on Sept. 6, according to the complaint, and the joint venture has failed to pay it off. The retail condominium is at the bottom of 1880 Broadway, a luxury residential building that Zeckendorf developed with Global Holdings over a decade ago.
Morgan Stanley loaned the group $125M in 2012, and the loan was later securitized, per PincusCo. Fortress and Madison invested in the property in subsequent years.
The 84K SF retail space is partially leased to West Elm and IT'SUGAR, but the largest tenant, Best Buy, vacated its store after its lease expired last year.
“We continue to believe in the asset’s long-term prospects and are actively marketing the space formerly occupied by Best Buy,” a spokesperson for the joint venture told PincusCo. “We are in continuing discussions with LNR and are hopeful that we can come to an agreement on a mutually-beneficial resolution — one that reflects current and expected market conditions and allows us to reinvest confidently in the property.”
LNR Partners, a subsidiary of Barry Sternlicht's Starwood Property Trust, also initiated pre-foreclosure proceedings last month, alongside Wilmington Trust, against Joe Sitt's real estate firm, asking a court to force Thor Equities to sell two of its Manhattan retail properties.
Retail assets have taken a serious hit in recent years, thanks to both the rise of e-commerce and the impacts the pandemic. However, rents have at least appeared to be improving. Average asking rents across Manhattan’s retail corridors hit $615 per SF in the last three months of the year, up 1.2% from the third quarter, according to CBRE. Rents had declined for 18 consecutive quarters before stabilizing in the second quarter and starting to rise in Q3.
The luxury condos above the troubled retail space were a sensation when Zeckendorf and Global Holdings developed them in 2010. The building was given the nickname "Limestone Jesus" and for years was among the top-performing in the city.