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July 24, 2024
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Real Estate

Commercial Real Estate Continues Its Descent in 2024

It’s a new year but the same old story for commercial real estate so far in 2024: distress.

The big news coming out of Los Angeles and Orange countries this week was the total CMBS debt coming due this year is about $21 billion

Sixty percent of those loans, tied to 400 properties in California, are on watchlists or special servicing.

Blackstone, Rising Realty and Brookfield are the biggest names facing potential defaults, and refinancing and selling look difficult, if not impossible.

Blackstone is the borrower behind six out of the largest 10 CMBS deals for Southern California properties maturing this year, with the largest a $2.7 billion debt backed by 138 warehouses across California, Texas, Florida and other states. 

In the Texas Triangle, multifamily syndicator GVA now faces at least two foreclosures after falling delinquent on a $145 million loan tied to three Sun Belt assets. 

The Oaks of North Dallas and Arbors at Fairview in Simpsonville, South Carolina, according to public records. 

It’s unclear if the loan’s third piece of collateral — Midtown Crossing in Raleigh, North Carolina — is also in foreclosure.

The recent filings bring the defaulted debts to over $600 million.

The syndicator has also faced foreclosure on the 285-unit Solara apartment complex in San Antonio after defaulting on a $56 million loan, a similarly sized community in Houston tied to a $288 million loan and two apartment complexes in Austin that collateralize a $125 million mortgage.

In San Francisco, Ashkenazy Acquisitions has missed a payment on a $66 million loan tied to a 17,000-square-foot retail building in Union Square, its second mortgage shortfall in recent months.

The New York-based investor led by Ben Ashkenazy missed a payment on the mortgage for the empty two-story storefront at 1 Stockton Street.

The delinquency comes three months after an Ashkenazy joint venture defaulted on a $50 million loan linked to the 42,000-square-foot One Union Square, the seven-story location of Bulgari, Moncler and Lacoste at 200-212 Stockton Street and 172-180 Geary Street.

In New York, lender Maverick Real Estate Partners finally nabbed a judgment in its three-year foreclosure battle against notorious landlord Steve Croman. 

Croman is on the hook for $35 million after defaulting on a $23 million loan backed by four multifamily properties, 208-214 East 25th Street in Kips Bay. a court-appointed referee determined Jan. 5. 

That extra $13 million owed largely stems from the 24 percent default interest rate Maverick tacked on when it acquired the loan from Croman’s original lender Miami-based BankUnited. 

Croman’s loan will continue to accrue interest at $15,400 per day until the debt is satisfied, according to the court filing. 

Maverick, a distressed debt player, earned its aggressive reputation by charging interest just shy of New York’s legal limit. Croman has previously called the firm “the bully in the schoolyard.”

In Chicago, Marty Paris, the developer and head of Sedgwick Properties, just finished a month-long stint in jail for failing to pay debts owed to his ex-wife. 

He faces larger financial trouble over his struggling 69-unit apartment development in Chicago’s Old Town neighborhood. Paris’s lender, Bridge Investment Group, is looking to foreclose on the property

Bridge wants to take over the keys to 301 West North Avenue in the Old Town neighborhood, claiming Sedgwick didn’t pay off the loan at maturity and that it missed monthly payments in April through July.

In other news

Crescent Heights keeps SF luxury tower after $384M loan default

NYC’s 180 Maiden Lane hits market in short sale

Friedman buys two Detroit towers amid downturn

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