A Midtown South office building owned by the Feil Organization fell into a special servicing hole after the matured mortgage went unpaid.
The property at 261 Fifth Avenue was transferred to special servicing, Crain’s reported. The transfer took place when Feil didn’t pay off the $180 million loan when it came due in September, according to a report from credit-rating agency KBRA.
The loan originated 10 years ago. The property generates enough cash to service its debts, Fitch Ratings reported in July, meaning there could be an opportunity to refinance at a higher rate.
To that end, a spokesperson for the developer claimed the firm was “negotiating an extension.” KBRA, meanwhile, claimed a workout strategy by the special servicer had not yet been revealed publicly.
The 26-story, 450,000-square-foot building off of East 29th Street is 82 percent leased, according to CoStar. Tenants include textile designer Himatsingka and DKC Public Relations, and asking rents go up to $71 per square foot.
Feil has been faced with distress across its 26-million-square-foot portfolio.
Private equity giant KKR’s securitized loan servicer, K-Star Asset Management, filed a foreclosure lawsuit in August alleging the landlord defaulted on debt tied to a four-story, 35,000-square-foot loft office building in the West Loop area in Chicago. The lender said Feil owed more than $8.2 million on the loan.
In Chicago, Feil already surrendered a similar loft office building in the River North district and is facing a lawsuit brought by special servicer Rialto Capital for an alleged default on a $105 million CMBS loan tied to another office building and seeking either forbearance or another loan modification for a $75 million debt tied to the North Riverside Park Mall in suburban Chicago.
Back in New York, Feil and its joint venture partners — BLDG and the Nakash Family — started construction on the conversion of a 14-story, 85,000-square-foot office building at 140 West 57th Street into 47 luxury condos; Deutsche Bank provided a $65 million construction loan for the project.
— Holden Walter-Warner
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