Return to Lender: Week of Sept. 21, 2023

As part of our expanded coverage of distressed assets, Connect CRE is introducing a new weekly feature, “Return to Lender.” It covers assets that have gone through foreclosure and have been or soon will be auctioned off, along with those that have become REO or which have recently transferred to special servicing.

• A venture of Skokie-based American Landmark Properties recently defaulted on a $95.5 million loan tied to the Schaumburg Towers office complex at 1400 and 1450 American Lane in the northwest suburb, Crain’s Chicago Business reported. A venture of Chicago-based lender Prime Finance Partners alleges in a lawsuit that American Landmark failed to pay off the mortgage when it matured June 9 and now owes just more than $83 million from a combination of the outstanding loan balance and other fees. 

• A $104.7-million CMBS loan secured by a mix of 32 office and industrial properties in Pennsylvania’s Lehigh Valley has moved into special servicing after the borrower requested a modification in advance of the loan’s January 2024 maturity date, according to Morningstar.  

• The Doubletree Norwalk, backed by the $17.3-million COMM 2015-CR23, has been liquidated at a loss after more than six years in special servicing and more than four years as REO. The liquidation was valued at $7.6 million, in line with the most recent appraisal, Morningstar reported. 

• In the newest special servicer comments on the $85.2-million GSMS 2018-GS10, DBGS 2018-C1| CMBX.12,GSK, collateralized by GSK’s North American headquarters in Philadelphia, the former reference to a likely extension and equity of new capital have been removed, according to Morningstar. The comments state that the borrower no longer wants an extension and will work with the servicer on a stipulated foreclosure. The single-tenant headquarters asset at the Philadelphia Navy Yard was built for GSK.

• The $421.3-million Courtyard by Marriott Portfolio, representing 100% of BBCMS 2018-CBM was transferred to special servicing after the borrower could not extend or pay off the loan by its July 2023 maturity date, Morningstar reported. A maturity extension has been requested. The borrower was also unable to cover its monthly debt service payments in June and July, and cited increased insurance premiums as the underlying cause of the deficit.  

• Trepp reported earlier this month that the largest CMBS loan to transfer to special servicing in August was the $274-million NEMA San Francisco loan. The loan is backed by a multifamily high-rise property secured by 754 luxury apartment units and 13,415 square feet of commercial space, built in 2013 and renovated in 2020. It is split between a single-asset single-borrower deal (NCMS 2019-NEMA) and two conduit deals (BBCMS 2019-C3, BBCMS 2019-C5). 

• Hilco Real Estate, LLC, said Sept. 27 was the qualified bid deadline for the Chapter 11 bankruptcy sale of a 15-story high-rise hotel in Midtown Manhattan. Situated at 442 W 36th St., this hotel presents a rare opportunity to acquire an unflagged, non-union hospitality asset in one of the most sought-after locations in the city, according to Hilco. Built in 1999, the 56-key hotel comes with assumable financing available at 5.2%, with the remaining 72-month term representing a cash-equivalent savings of $2.2 million. The sale is being conducted by Order of the U.S. Bankruptcy Court District of Eastern New York, Bankruptcy Petition No. 22-bk-40563 (JMM), In re: 36th Street Property, Inc. and is subject to court approval. 

• Also in Manhattan, Hilco said Oct. 18 was the qualifying bid deadline for the bankruptcy sale of the historic former Public School 64 in the East Village. The property closed as a school in 1977 and has since become a community center. It presents an opportunity for the approved construction of 535 beds for student/college dormitory or alternatively offers a developer or investor the potential to help mitigate the current homeless and migrant crisis by using the building for that purpose. The sale is being conducted by Order of the U.S. Bankruptcy Court Southern District of New York (Manhattan) Bankruptcy Petition No. 23-10423-dsj, In re: 9th & 10th Street LLC.