Chetrit Group’s Distressed Office Sees Valuation Halved

Chetrit Group’s Distressed Office Sees Valuation Halved

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The news at Meyer Chetrit’s 65 Broadway keeps getting worse.

An appraisal this month valued the Chetrit Group’s Financial District office at $104.3 million, according to a Morningstar alert. That’s a 51 percent decline from the $215 million valuation posted in 2019, when a loan attached to the property originated.

Not only is the valuation less than half of the value when the loan was issued, but it’s a third lower than the $151 million loan itself. That could explain why Chetrit didn’t pay off the loan at maturity in April.

A representative of Chetrit did not immediately respond to a request for comment from The Real Deal.

The loan tied to the property went to special servicing in March, a month ahead of the maturity date. Chetrit was current on the loan at the time it hit special servicing.

The century-old office tower, formerly known as the American Express Building, has seen occupancy since Meyer Chetrit and loan co-sponsor Robert Wolf of Read Property Group locked in their debt in 2019. Occupancy was close to 100 percent back then, but was down to 75 percent by the end of 2022 and 67 percent in September.

Meanwhile, cash flow has come to a crashing halt. By the end of 2022, revenue was barely covering debt service and was 15 percent below issuance.

Outside of the Financial District, the $77 million in debt backed by Chetrit’s Devlin Building at 459 Broadway and 427 Broadway, two office buildings with retail spots in Soho, transferred to special servicer Rialto Capital Advisors after ownership skipped its January loan payment. The distress was seemingly due to rising expenses.

Last year, Chetrit handed the keys to 850 Third Avenue to its lender after missing the maturity date on a $77 million securitized mortgage. The Midtown East office building suffered a tough blow when its tenant Discovery chose to move out right as Chetrit was closing on the building in 2019.

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