A 508-unit multifamily property in Manhattan’s Financial District is slated for special servicing after New York City-based Metro Loft failed to pay off the loan at its November 2024 maturity, according to Morningstar Credit.
The property, 180 Water St., has a $265 million loan that originated in 2019 and an additional $100 million in mezzanine debt. Vanbarton Group and Metro Loft Management began a $100 million project to convert the property from office space to apartments in 2015, according to the New York Post. Metro Loft purchased the property from Vanbarton in 2017 for $450 million.
Using the 2023 cash flow, the debt yield is 5.6%, and when including the mezzanine debt, it’s only 4.1%, Sarah Helwig, vice president at Morningstar Credit, told Multifamily Dive.
“The loan was structured with interest-only payments for the full term, so there’s been no paydown and interest rates are up significantly,” Helwig said.
Despite the leverage issues, performance at 180 Water St. is relatively solid, with net cash flow in line with the issuance level, according to Morningstar. Performance was down slightly in 2022 but improved in 2023.
“Occupancy is strong at 98% [as of June 2024], and rents have risen since issuance, but that could also indicate limited upside potential,” Helwig said. “At the same time, expenses have also increased.”
180 Water St. was built in 1971 as a 24-story office tower but was converted into a 29-story, 480,000-gross-square-foot multifamily rental development, according to the property website. As part of the project, a 40-foot-wide courtyard was carved out at the core of the building above the second floor and five stories were added, making up for the lost space.
In addition to apartments, the property features approximately 10,000 square feet of retail space and luxury amenities, including a 24-hour doorman, a rooftop terrace with pool, a full fitness center, a children’s playroom and a tenant lounge. Rents range from $2,971 to $7,871, according to Apartments.com.
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