$200M Loan for Soho Office Property Defaults

A $200 million loan for an office property in Soho, Manhattan has defaulted, as the building has struggled to recover from the pandemic.This will apply to the Prince Building at 568 Broadway, which is owned by Stanley Cayre of Midtown Equities, and Eric Hader of Allied Partners. The repayment of the debt was not made by the October maturity, according to a report from Fitch Ratings. It came after the loan’s maturity was extended to October 2023, with another 12-month option.Fitch said it was the largest new loan delinquency for last month.The Prince Building was operating only at 50 percent in the first half, according to a report from the Commercial Observer, citing data from Trepp. That’s down significantly from the 93 percent in 2022. Plus, the debt-service coverage ratio was cut by more than half to 1.05x, compared with 2.19x a couple of years ago. The modern work trend has just made things worse for the Class B office properties.The Real Deal reports that Hader and Cayre are making efforts for another chance at an extension amid negotiations with Rialto Capital Advisors. Rialto is “evaluating all options,” the news outlet reported, citing Morningstar.Since the pandemic, landlords have needed to adapt to the modern office appeal to attract employees. The evidence is clear: Class-A and trophy assets with upscale amenities, are working – leading to higher rents and lower vacancies. But it’s a different story for Class B and C properties, which could explain the Prince Building’s struggles.That said, New York has been one of the leaders in the nation for office recovery since the pandemic. In August, Manhattan offices were found to be 73.4 percent as busy compared with the same month in 2019, according to a recent report from Avison Young. That’s up significantly from the national average of 60.4 percent.