Weekly Market Report - June 18, 2025
- Broker Support
- Jun 20
- 13 min read
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JEMB Realty has requested that the $230 million loan for the office tower at 75 Broad St. be transferred to special servicing due to declining occupancy and cash flow concerns. The building, once home to ITT Inc., is currently under 60% occupied, according to the Morningstar Credit database. Although the loan is current, Torchlight Loan Services, the special servicer, noted that cash flow will not cover future debt service. The loan comprises two senior notes totaling $92 million and two junior notes of $128 million, with an additional $20 million of unsecured mezzanine debt. JEMB bought the building for $75 million in 1999, and occupancy has continued to fall. Lower Manhattan has been lagging in office leases but recently saw a significant uptick in leasing activity, with over 1.4 million square feet signed in the first quarter of the year, boosted by Jane Street Capital's renewal.
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Shorenstein Properties is facing challenges with its New York City office tower at 1407 Broadway, which could lead to losses for bondholders who invested in its debt. The top-rated CMBS loan for this building was downgraded by Fitch Ratings, as the property's value has fallen significantly. Shorenstein bought the Class-A tower in 2015 and took a $350M loan in 2019, valued then at $510M. However, recent appraisals show the value now at only $120M, a decline of 76% from 2019.
Occupancy at the tower has decreased from 94% in 2019 to 75%. While Shorenstein has renewed some leases, a significant portion of leased space will expire soon. The company is in discussions with a special servicer regarding the loan, but progress has been minimal. The downgrade highlights the issues with single-asset CMBS loans linked to office buildings, as seen in a previous instance where Blackstone's building sold for much less than its earlier value. Shorenstein has had to return properties to lenders recently, marking a significant shift for the firm.
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Fund sold $1.6 billion worth of property from December to May to meet redemption requests
Starwood Capital Group's real-estate fund faced many withdrawal requests last spring, prompting CEO Barry Sternlicht to limit the amount investors could take out to avoid selling properties in a poor market. Over a year later, investors still want to withdraw about $850 million. The Starwood Real Estate Income Trust (Sreit) is struggling, with its asset value down 40% from its 2022 peak, now at $8.8 billion. Share prices also dropped about 24% to $20.97 in April. While Sternlicht chose not to sell properties at depressed prices, Sreit has sold properties worth $1.6 billion to address redemption requests, slightly increasing the available withdrawal amount.
Nontraded REITs like Sreit are open to small investors but have seen a decline in fundraising due to rising interest rates, which have made other investments more appealing. Sreit’s liquidity fell below $800 million, leading to strict withdrawal limits of 1% of net asset value per quarter. As these limits eased, new CEO Nora Creedon aims to improve Sreit’s position. Sternlicht believes that fundraising will recover as interest rates drop and property values rise, especially in apartment buildings.
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Following a series of setbacks, the billionaire investor is gearing up to add to a trophy portfolio that includes The Plaza hotel and the former Barneys flagship
Ben Ashkenazy, a private real estate billionaire, plans to spend $750 million from his own funds and investors to acquire struggling retail and hospitality properties. His net worth has decreased since 2019, but his portfolio is still valued at about $10 billion. Despite criticism for loan defaults, he is seen as likely to recover from recent challenges, as successful developers typically do. Ashkenazy began his career at age 15, discovering and buying undervalued properties. He made significant acquisitions, including Barneys and Grosvenor House Hotel. The COVID-19 pandemic caused major setbacks, including foreclosures, but he has remained active, particularly with Washington’s Union Station. He defaulted on a mortgage in 2020, leading to a foreclosure auction. He has also faced legal disputes but has remained invested in property debt and stocks, while seeking to sell various properties, including a 76-acre estate for $125 million.
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The 43-story tower at 520 Madison Ave., which is the headquarters for Jefferies Group, has lost its AAA rating after Moody’s downgraded its $675 million mortgage to AA. The downgrade is due to lower cash flow, although the building's fixed-rate mortgage doesn't mature until 2034. Despite this, Tishman Speyer, the property owner, claims they are seeing increased leasing interest, with over 125,000 square feet leased in the past year at prices above $100 per square foot.
520 Madison is now the fifth Midtown office tower to lose its AAA rating, joining others like 1 Park Ave. and 667 Madison Ave. Moody’s reports that occupancy is expected to stay around 90%, down from an average of 96% over the last decade, and that operating expenses are rising faster than income. Additionally, competition has increased from new buildings like 1 Vanderbilt Ave., which has attracted former tenants. Jefferies' lease, covering about half the space, expires in 2029. Tishman Speyer has rented most of the floors that became vacant recently, aiming to increase occupancy from 95% to 99%.
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The Hilton Garden Inn in Midtown was sold at a foreclosure auction after developer Joseph Moinian failed to convince a judge to delay the sale. Twin Summit NY LLC won the auction with a bid of $10 million, being the only bidder. Moinian Group developed the hotel with Starwood Capital Group for $131 million in 2013, but defaulted on the $175 million mortgage due in March despite good occupancy rates. The hotel's estimated value dropped from $150 million to around $120 million, as assessed by KBRA. Moinian requested to postpone the auction due to a $10 million judgment related to an incident involving a guest, but this request was denied. Moinian Group has over 20 million square feet in its portfolio, including several notable properties.
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A member of the Ashkenazy family has sold a development site in the Bronx for $11.5 million, where the buyer plans to build a mixed-use project utilizing the state's 485-x affordable housing tax incentive. The site, located at 205 W. 230th St. in Kingsbridge, was sold by Michael Ashkenazy and Joshua Agus, who bought it in 2017 for $7 million, showing a significant profit on the sale. This was an all-cash transaction, facilitated by Lev Kimyagarov of Development Site Advisors.
Westorchard Management had previously filed plans for a 12-story building with 99 residential units at the site, but it is unclear if the new buyer, Andrea Gjini, will proceed with this development. Michael Ashkenazy is associated with Ashkenazy Acquisition Corp., led by his brother Ben, who is not involved in this Bronx property. As of May 1, around 118 buildings with approximately 2,600 housing units have signed up to use the 485-x incentive for affordable housing.
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A majority of shareholders want Chairman Alan Fishman removed from Ladder Capital's board, with over 52% voting against his re-election at the annual meeting. It's uncertain if he will step down. Fishman's challenges include the company's stock being more than 40% below its pre-pandemic value and resistance from him and two other board members to annual votes on the large pay packages for CEO Brian Harris, despite a strong push from shareholders for such votes. Proxy advisory firms criticized the board for ignoring shareholders' wishes and poor responsiveness related to executive compensation. Ladder believes annual "Say on Pay" votes are a waste of resources. Fishman, a co-founder and non-executive chairman since 2008, may become a "zombie" director, akin to another board member, Douglas Durst, who has previously faced removal efforts.
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Blackstone abandons foreclosure, sells loan to Meadow Partners
RFR Holding has received temporary relief on the Upper East Side after its lender stopped a foreclosure case to sell the debt instead. Meadow Partners bought a $10.5 million loan linked to RFR’s properties at 404 East 76th Street and 1460 First Avenue. The East 76th Street site has retail space and office units, while the First Avenue building is a residential walkup. The properties total 27,000 square feet and have over 10,000 square feet of additional air rights. Prior to this, Blackstone was pursuing foreclosure due to RFR's loan default, but this action was halted in May, and the loan sale closed in June. It remains uncertain if Meadow will continue with foreclosure actions. RFR has faced financial difficulties, including a recent foreclosure on 285 Madison Avenue. Additionally, Citibank filed a foreclosure suit against RFR co-founder Michael Fuchs for his condo.
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Media company offers Midtown spaces at Paramount Group, SL Green properties
Paramount Global is seeking to sublease 355,000 square feet in Midtown Manhattan as it downsizes due to a 3.5 percent staff reduction and a potential merger with Skydance Media. The main property for sublease is a 253,000-square-foot office at 1633 Broadway, which has been available for over a year. Showtime Networks, a subsidiary of Paramount Global, has been occupying this space and paying a base rent of $55.28 per square foot since June 2020, with the lease expiring in 2026. Additionally, Paramount Global is also offering 103,000 square feet at 1515 Broadway, where its lease lasts until 2031. SL Green, the property owner, is considering converting this office space into a hotel and gaming area, depending on a gaming license application due soon.
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Chetrits restructured Rialto loan on 427 Broadway, cast iron building now nearly fully occupied
The Chetrit Organization has secured a new members-only club, Lightning Society, for their Soho office building at 427 Broadway, enhancing occupancy nearly to 100%. Michael Chetrit anticipates that the club will significantly contribute to the cultural life of Soho. The Chetrits recently restructured a $76.5 million loan with Rialto after previously falling behind on payments, which resulted in the loan entering special servicing. Lightning Society aims to foster cultural activities through events and artistic expression, with membership applications opening before a winter 2025 launch. This club, featuring a tea house and listening room, marks its first permanent location. The lease represents a recovery for 427 Broadway, which faced challenges after American Apparel's bankruptcy in 2017 and subsequent COVID-19 impacts. Additionally, Hello82, a K-pop record label, has leased 6,900 square feet at the same building.
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Southeast Asia monarch in talks for purchase that could value property at $2B
The sultan of Brunei, Hassanal Bolkiah, is in discussions to buy the Pierre Hotel in Manhattan, valued at about $2 billion. The sale is not finalized, and he is not the only potential buyer. The hotel has been leased to Taj Hotels since 2005 and features 189 rooms, retail spaces, and restaurants. It also includes 80 co-op units, whose owners need to approve any sale. Notable co-op owners include fashion designer Tory Burch and media heiress Shari Redstone. The Newmark Group, connected to Commerce Secretary Howard Lutnick, is advising on the sale, which has been on the market since last year. Bolkiah is collaborating with Essam Khashoggi on the proposal. The sultan had previously shown interest in purchasing the Plaza Hotel in 2015, which sparked protests.
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Rechler’s firm has July 30th deadline to close deal
Scott Rechler's RXR is moving closer to acquiring 590 Madison Avenue, having signed a hard contract and paid a $50 million deposit. They agreed to buy the skyscraper from STRS Ohio for nearly $1.1 billion, after signing a letter of intent about three and a half weeks ago. The deal is expected to close by July 30, with a possibility of completion in mid-July. RXR previously tried to purchase the building when it was first listed in 2018 and made an unsolicited offer last year. STRS Ohio is also a partner on another RXR property leased to Amazon in Queens. This sale marks the first New York City office transaction over $1 billion since Google’s purchase in 2022.
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Buyout group Ardian in exclusive talks with Gucci parent
A year and a half after making a significant investment in New York City’s market, Kering is now looking to sell a stake in its property at 717 Fifth Avenue. The French luxury group is in exclusive talks with Ardian, a private investment firm, about the deal, but details about the stake size and property valuation are not clear, and both sides have declined to comment. Kering previously acquired the retail segment of 715-717 Fifth Avenue for $963 million, as part of its strategy to buy prime real estate worldwide. However, as luxury goods demand has decreased, Kering's debt rose to around $12 billion, prompting cuts and asset sales. They aim to raise around 2 billion euros through real estate transactions in the next two years, focusing on selling parts of properties for co-ownership.
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Office, retail, hotel components offered for $600M
Related Companies is progressing with an office tower in Hudson Yards instead of a proposed casino. The developer, along with partner Oxford Properties, is considering selling or recapitalizing part of 35 Hudson Yards, which includes office, retail, fitness, and hotel spaces, excluding residential units. The available sections comprise 180,000 square feet of fully leased office space, an Equinox gym, and a retail area that is 73 percent leased, featuring brands like SoulCycle. There is also a 15-floor Equinox Hotel with 212 rooms. The total asking price for these parts could reach $600 million. Newmark's Doug Harmon and Adam Spies are managing the sale process.
Previously, Related and Oxford raised $2 billion to construct the 1,000-foot tower, one of the tallest in the U. S., which benefits from a tax abatement until 2039. Earlier this year, a luxury residential unit listed at $15 million was contracted. Hudson Yards remains a key development in New York, with plans for additional housing, offices, and a hotel following the withdrawal of a casino partnership.
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Alternative investment manager acquired 46% interest in Midtown office building
Blackstone Real Estate has officially invested in Fisher Brothers’ 1345 Sixth Avenue, acquiring a 46 percent share in the Midtown Manhattan office building. This investment raised the building's total valuation to $1.4 billion, a significant increase from the $896 million appraisal by S&P Global last year. Fisher Brothers also increased its majority stake and refinanced the property with $850 million from Morgan Stanley, Citibank, and JPMorgan Chase. The refinancing has a two-year maturity with options for three one-year extensions based on financial conditions. The building, which is 92 percent leased, recently secured major leases from Intercontinental Exchange and law firm Paul, Weiss. Although a $120 million renovation improved the property, the ownership faces $200 million in tenant improvements and rent concessions for Paul Weiss, which occupies 42 percent of the space. This is Blackstone's first major move in Manhattan's office market in three years.
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Gaming operator folded on casino bid earlier this spring
The future of the Nassau Coliseum site is uncertain, but Nassau County Executive Bruce Blakeman announced that the county will move away from plans for a casino. This decision followed the Las Vegas Sands withdrawing its casino bid in April due to economic concerns and the growth of online gambling. However, Sands will continue to work on a new sports, entertainment, and hospitality project at the site. Blakeman confirmed that Sands would invest hundreds of millions into the area and fulfill commitments related to the casino proposal that is now on hold.
The initial casino plan, proposed in 2022, had received county approval for a $6 billion lease but faced legal challenges from nearby Hofstra University. Sands is seeking zoning changes necessary for its new plans, which would allow for gambling, a luxury hotel, a spa, retail spaces, restaurants, and parks. Meanwhile, the competition is heating up for the remaining downstate gambling licenses, with several major players vying for them as the June 27 deadline approaches.
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David Simon is cutting back his working hours as he battles cancer, but he has never been one to give up control
David Simon, who took over the family business at 29, is now considering his son's readiness to lead Simon Property Group. At 63, he is battling pancreatic cancer but remains in charge, though he has reduced his working hours. Known as a demanding and detail-oriented micromanager, Simon prefers control and continues to work despite his health issues. He has undergone chemotherapy and surgeries but still participates in important meetings. Eli, his eldest son, joined the company in 2019 and is gaining more responsibility. While David is known for his aggressive management style, Eli takes a more collaborative approach.
The decision on the next CEO will ultimately be made by the company's board, but David believes Eli is capable of leading the company. For now, David remains focused on his work. Floris van Dijkum, managing director at Compass Point Research, highlighted Simon's expertise in retail, which has allowed Simon Property Group to thrive during retailer bankruptcies. Since 2016, Simon has successfully acquired several brands, though not all purchases were successful. Simon's family business, founded in 1960, faced debt when he joined, but he turned it around, leading to a major IPO in 1993. He has spent over $40 billion on acquisitions, adapting to challenges like e-commerce by upgrading malls. Simon prioritizes mentoring younger executives, including his son Eli, and enjoys time with his grandchildren.
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Paramount Group’s announcement comes after the firm revealed $4 million in previously undisclosed payments to its CEO
Paramount Group, a major office landlord in New York City and San Francisco, is considering strategic options for its business, including a possible sale. The company has hired Bank of America as a financial adviser and Latham & Watkins for legal support to conduct this review, which has no set deadline and uncertain outcomes. This could result in selling the entire company, parts of it, recapitalization, or forming a joint venture. Following the announcement, Paramount’s stock surged by 15%, with a market cap exceeding $2 billion.
Recent months have been challenging for Paramount, which has faced shareholder concerns after revealing over $4 million in undisclosed payments for CEO Albert Behler's personal and business expenses. This includes over $900,000 for personal accounting services and more than $3 million paid to a private jet company partly owned by Behler. Critics have pointed out that despite poor returns compared to competitors, executives still receive high pay. Several executives, including key financial and legal leaders, have left the company. An internal meeting is planned to discuss these changes, the strategic review, and leasing activity.
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Fund sold $1.6 billion worth of property from December to May to meet redemption requests
Starwood Capital Group's major real-estate fund faced a surge of redemption requests last spring, forcing CEO Barry Sternlicht to limit withdrawals instead of selling properties in a poor market. Over a year later, investors are still trying to withdraw around $850 million, and the fund, known as Sreit, has struggled to attract new investments due to its strict redemption limits. Its net asset value has dropped 40% from its peak in 2022, affected by declining real estate values and investor redemptions before the new limits were set. To address redemption requests, Sreit sold $1.6 billion in properties, enabling a slight increase in withdrawal amounts.
Nontraded REITs, like Sreit, target smaller investors with lower minimum investments but have seen reduced capital inflows due to rising interest rates making other investments more appealing. Starwood's situation has raised concerns about liquidity in similar funds, as investors question potential withdrawal limitations. Sreit’s troubles began when the Federal Reserve increased interest rates in 2022, impacting commercial property values. The fund’s liquidity fell, leading to tighter withdrawal restrictions. However, with recent property sales, liquidity has improved, and Sternlicht remains optimistic about future growth as rates potentially decline.
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