New York’s long-awaited troubled deals may finally start to appear.
Canadian bank CIBC sold a $ 40 million delinquent loan on the retail stretch of 445 Fifth Avenue to a loan fund linked to Torchlight Investors.
Harbor Group International reportedly defaulted in May 2020 on the loan the company used to acquire the 18,000 square foot commercial portion of the 33-story Midtown condo building.
CIBC sued the developer in September, alleging that Harbor Group missed monthly payments and failed to maintain the required minimum reserve balance of $ 725,000.
In January, a judge appointed a temporary receiver, New York City attorney Phil Sklar, to take control of the property. The sale of the loan was completed in March, but was not recorded in public records until the end of last month. Torchlight recently filed a motion to replace CIBC as plaintiff in the Harbor Group lawsuit.
But it could take some time before Torchlight can proceed with a foreclosure. New York state has a moratorium on Covid-related business evictions until August 31.
At the end of the moratorium, Torchlight could seize and take control of the property. The lender could also restructure the loan.
Almost all of the 18,000 square foot retail space will be occupied by Australian firm Brickworks, which signed a 10-year lease last year and which planned to open a design store this summer. . The space was previously leased to Charming Charlie jewelry store, which filed for bankruptcy in 2017 and again in 2019.
Harbor Group purchased the commercial portion of the Fifth Avenue condo tower in 2015 from Thor Equities for $ 68 million.
Despite doomsday projections, little distress has hit New York’s commercial real estate market. At the end of 2020, sales of distressed assets represented just 1% of real estate sales, according to Real Capital Analytics. Some industry professionals expect this to change when the foreclosure moratorium ends.
Harbor Group, led by Jordan Slone, owns and manages 4.1 million square feet of commercial real estate and its portfolio is worth $ 12.7 billion, according to its website. Harbor Group did not return a request for comment.
Torchlight specializes in dealing with troubled debt and has acquired more than $ 25 billion in commercial debt investments, according to its website. The firm did not respond to a request for comment.
CIBC also did not return a request for comment.