The Rise and Falling of New York's Busiest Building Buyer
The New York Observer reports: The New York Observer reports: Two years ago, Broadway Partners was an empire on the march. They owned some of the country’s best Class A office properties—the 62-story Aon Center in Los Angeles, One City Centre in Houston, 522 Fifth Avenue in New York—but they were always searching for more.
Their Macklowe-like strategy: to rake in office properties on highly leveraged loans, wait for rents to rise, and sell the buildings at a profit within two years.
Now, Broadway has defaulted on short-term loans for over a dozen buildings, and two of their properties have been foreclosed. To make matters worse, Broadway’s primary lender for many of these buildings—such as 10 properties, including one in New York, bought on May 15, 2007, alone—was Lehman Brothers. The question now is whether they can raise the necessary capital to pay off their loans and survive.
Selling may be the only way Broadway can raise the necessary capital to pay off their short-term loans, which are coming due for three office properties in spite of a recent deal struck with Lehman, according to Real Capital Analytics: 280 Park Avenue, the Park Avenue Atrium, and the Union Bank of California Center in Seattle (340 Madison is also potentially troubled).
Real Capital Analytics’ managing director Dan Fasulo explained that lenders don’t see the use in taking back that much real estate. “As opposed to rushing to foreclosure,” he said, “many lenders have realized that, ‘If I take this asset back, what am I going to do with it? At least I have a skilled operator on the ground who can manage it.’”
View the full article on The New York Observer: The Rise and Falling of New York's Busiest Building Buyer
Posted by: Matthew Stone