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March 2021

March 2021 » Market Analysis » NY New Developments

March 2021 New York New Developments


New York New Developments

New York’s moratorium on commercial evictions and foreclosures and a bill to replace it has hit a roadblock. The current ban from March 2020 moratorium on commercial evictions and foreclosures, which he has repeatedly extended. The latest extension, through a Jan. 23 executive order, prevents those actions from taking place until Feb. 22. But Cuomo has yet to take action on legislation that would make the ban semi-permanent. The state Senate proposed a bipartisan commission to review Cuomo’s orders, and Assembly Democrats have also called for the revocation of those powers.

The rate of positive Covid tests in New York dipped below 3% for the first time in months. While Covid cases have ticked down in New York from last month, they still remain high. The statewide coronavirus case rate was 38 per 100,000 people, the second highest new case rate in the country.

With the rollout of the vaccine progressing more slowly than expected, new strains of the virus emerging and schools remaining remote, companies and employees are tempering their expectations of returning to normal this year.

CVS’s expects to administer more than 3 million vaccines in about 40,000 long-term facilities. In mid December, CVS started immunizing nursing home workers and residents. So far, the company has administered about 15 million coronavirus tests.

The Grand Hyatt building next to Grand Central Terminal is set to be replaced with a 1,600-foot office and hotel tower known as 175 Park Avenue. It would be the tallest building in the city. RXR Realty’s 83-story, 2.2 million-square-foot tower will be home to a new public train hall that adds street entrances to the Grand Central/42nd Street subway station. The project will also add a 12,000-square-foot underground passageway connecting the Long Island Rail Road to the lower-level Metro-North platforms and subway station mezzanine.

Rabina Properties filed plans to build a 70-story mixed-use skyscraper at Fifth Avenue and East 43rd Street in Midtown. The 452,134-square-foot building will include 98 residential units across 35 floors, with 24 stories dedicated to office space. Several floors would feature amenities like a solarium and private dining.

Gotham Organization wants to build a 47-story mixed-use building in Hell’s Kitchen. Plans for the 428,208-square-foot tower include 453 residential units along with 57,000 square feet for a community facility and 27,500 square feet of commercial space.

The state has tweaked its proposal for the conversion of offices and hotels to housing, limiting which buildings would be eligible. But some feel that the measure still doesn’t go far enough in creating new affordable housing.

Landlords and homeowners are struggling to pay their property taxes. Unpaid taxes rose to $1.3 billion this month, or about 4.5% of the $30 billion total due this year.

Hotels:

U.S. hotel occupancy rates dipped below 40%. In 2020, the overall occupancy rate was 41.6%. New York City had revenue per available room (RevPAR) dropping 77% year-over-year.

DekaBank moved to foreclose on the former New York Marriott East Side hotel at 525 Lexington Avenue. The German lender claims a $53 million outstanding mortgage loan, which came due in July, remains unpaid. Lexington Avenue Hotel is a limited partnership between DekaBank subsidiary Deka Immobilien Investment GmbH, which owns an 85% stake, and Ashkenazy Acquisition Corp. The hotel shut in March following the outbreak of the coronavirus.

Hotels have been among the hardest hit by the pandemic. New York suffered a nearly 16% decrease in employment. Once again, leisure and hospitality took a huge hit, with over 182,000 of those workers losing their jobs.

Leonard Stern walks away from Soho Grand, Roxy Hotels and wants to hand the keys over to its lenders on its Soho Grand and Roxy Hotels in Lower Manhattan. Hartz Mountain has requested to transfer the hotels to the special servicer on the $110 million loan via a deed-in-lieu of foreclosure.

Canadian Imperial Bank of Commerce has moved to foreclose on a Manhattan hotel building owned by Prodigy Network. The lender claimed that the hotel owner an LLC tied to Prodigy failed to make interest payments going back to last May, and did not pay the outstanding $81 million principal when the loan matured this January.

Marriott International recorded an annual loss of $267 million. Occupancy was down, falling nearly 36% points to 35%.

The Yard signed a management agreement with the owner of the former Courtyard by Marriott at 8 Herald Square for a 76,000-square-foot building and is in the process of being converted into a flex-office space, with hotel rooms on the fourth and fifth floors turned into private offices.

A number of businesses are cutting ties with the Trump Organization, among them Cushman & Wakefield, JLL, Deutsche Bank, the Girl Scouts of Greater New York and Signature Bank. The city of New York announced it would cancel its contracts with Trump.

Vornado Realty Trust is seeking to end its partnership with the Trump Organization 30% stake in 1290 Sixth Avenue. Vornado is concerned that investors and potential lenders are staying away from the properties because of the Trump Organization’s ownership.

40 Wall Street owned by Trump had annualized revenue 11% drop year-over-year. Its debt service coverage ratio has declined, going from 1.67 times in 2019 to 1.24 times in 2020. The $137 million loan on the building has been on a watch list since November due to pandemic-related revenue decline.

Exact Capital plans to build a seven-story mixed-use building in the Westchester Square of the Bronx. The 173,111-square-foot building is to include 182 residential units along with about 16,000 square feet of commercial space and 2,000 square feet for a community facility.

Peter Fine wants to build a six-story educational building in Longwood. Plans for the 109,000-square-foot building include classrooms, offices and a gymnasium, as well as about 19,000 square feet of commercial space.

SK Development, in partnership with Ironstate and CB Development, plans to build a 21-story mixed-use development in Noho. Plans for the 99,000-square-foot building include community facilities on the second to fourth floors and offices on the higher floors.

KIPP NYC, a charter school organization, wants to build a six-story, 95,000-square-foot building in Fordham Manor. The building is set to include classrooms, a cafeteria and a gym.

With government constraints on commercial evictions and foreclosures still in effect in New York, some of the most heated disputes between borrowers and lenders have been at the mezzanine level.

Vornado Realty Trust and Canada Pension Plan Investment Board are in talks with Deutsche Bank and Barclays to receive a $525 million refinance for the 22-story office tower at 1 Park Avenue. The refinancing follows a 633,000-square-foot lease renewal by New York University’s Langone Medical Center. The lease was among the largest deals signed in 2020.

HFZ Capital Group has lost control of four Manhattan condo conversion projects as the developer fights for survival amid a blizzard of legal and financial problems. Los Angeles-based CIM Group, one of HFZ’s lenders, last month foreclosed on the junior mezzanine positions tied to four properties: 88 and 90 Lexington Avenue; The Astor at 235 West 75th Street; and Fifty Third and Eighth at 301 West 53rd Street.

Dan Kamensky, the founder of hedge fund Marble Ridge Capital, has pleaded guilty to bankruptcy fraud related to Neiman Marcus. Kamensky was involved in a scheme to pressure a rival bidder to abandon its higher bid for assets included in Neiman’s bankruptcy proceedings so that Marble Ridge could obtain those assets for a lower price. He was arrested.

Commercial landlords and a union 32BJ SEIU representing office security guards and window cleaners have reached a four-year contract for 1,000 security officers working at city office buildings. The deal includes a $1.65 raise in hourly pay over four years and employer-paid health insurance.

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