Midland Loan Services, the special servicer on the troubled New York office at 1740 Broadway, has hired Chicago-based advisory JLL to market the sale of the existing $308 million mortgage. The loan, which was securitized in a 2015 commercial mortgage-backed securities deal, is expected to be sold for a discount of about 50 percent.
The 600,000-square-foot, class B office has been in flux since former owner New York-based mega-manager Blackstone Group stopped making payments on the loan in March 2022. The loan was then transferred into special servicing, with several different servicers handling the workout process over the past year as the appraisal of the property’s value fell. Ultimately, Midland, which had briefly serviced the loan last year, was named the special servicer again in August.
A report in the New York Post, citing sale documents, said the existing mortgage has been repackaged into a stand-alone CMBS deal. While appraised at $605 million at the time of securitization, the building’s value has since fallen substantially, with more recent valuations closer to the tune of $175 million.
The way forward is not clear for the property, as the city’s return-to-office momentum has proceeded more slowly than expected. That said, the low basis a potential buyer could achieve combined with new programs incentivizing office to residential conversions, means the property could follow that path, one local broker noted.
The situation with 1740 Broadway aside, there have been signs of life in New York’s office market. December research from New York trade group The Real Estate Board of New York found office visitation rates were about 70 percent of pre-pandemic levels in October.
Additionally, leasing activity in October was more than 2.5 million square feet, according to Frank Wallach, executive managing director of research and business development at Toronto-based advisory Colliers.