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Vornado, Related office loan transferred to special servicing over default risk
The CMBS loan on the Chelsea building, backed by a $396M mortgage, is set to mature in December.
Vornado Realty Trust and Related Cos. have transferred a $396M mortgage tied to their 85 10th Ave. office building in Chelsea to special servicing due to cash flow concerns, according to a Morningstar Credit alert highlighted by Bisnow.
Morningstar Credit noted the transfer was tied to a potential “imminent default.” The loan is scheduled to mature in December, and the property is also encumbered by $229M of mezzanine debt.
The 11-story building totals 635K square feet and is 89.9% occupied, the report says, with Google as the largest tenant after renewing about 300K SF in 2024. A Morningstar Credit analysis cited in the article says cash flow has “significantly lagged” since the pandemic.
Bisnow also reports that cash flow last year was 28% below projected levels used during a 2016 refinancing, which included a Deutsche Bank loan, and that the building’s cash flow gap has contributed to the current servicing move. Morningstar Credit Associate Managing Director David Putro said the situation appears likely to be handled through modification or extension and that he does not expect large equity contributions given the occupancy and the strength of the NYC office market.