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Related Fund Management and BentallGreenOak are giving up on a Long Island City office complex they bought in 2016 and spent millions overhauling.
BGO and Related are walking away from The Point LIC after they defaulted on their mortgage on two buildings, the Paragon Building at 2100 49th Ave. and the Blanchard Building at 2109 Borden Ave., which are still largely vacant, The Real Deal reports, citing unnamed sources.
BrightSpire Capital, a REIT that provided the financing, is looking to sell the nonperforming loan, with the joint venture agreeing to a deed-in-lieu-of-foreclosure arrangement, giving the keys to whomever purchases the debt, TRD reports.
It is the latest sign of the reckoning faced by the city’s office owners as hybrid work and companies consolidating space have dimmed many properties' outlooks. Blackstone last year opted to hand the keys to 1740 Broadway back to its lender. RXR Realty, a major office owner in the city, has already begun to consider which buildings would be good candidates for conversion to residential offerings — and which it might have to give "back to the bank."
Many have predicted higher levels of distressed sales for older office buildings this year as loans mature and owners face a less attractive refinancing environment. More than $12B worth of commercial mortgage-backed securities on office buildings in Manhattan are maturing this year, per Trepp. SL Green and Vornado’s $1.1B loan on 280 Park Ave. is set to mature in May.
BGO and Related's asset management unit paid $104M for the Paragon and Blanchard properties in 2016 and spent $45M renovating them. The debt on the buildings adds up to about $150M, per TRD.
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