The $308 million mortgage on a Manhattan office tower owned by Blackstone Inc. is up for sale again after the private equity giant defaulted on the debt more than a year ago.
Midland Loan Services, the special servicer, hired brokerage Jones Lang LaSalle Inc. to sell the loan backed by 1740 Broadway, according to people familiar with the matter. The debt, which is packaged into a commercial mortgage-backed security, is being marketed at roughly $150 million—a 50% discount—said the people, who asked not to be named because the process is private.
In September, Bloomberg reported that the loan sales team at CBRE Group Inc. was hired to sell the mortgage, but it was pulled from the market shortly after.
The 26-story tower—between 55th and 56th streets—was appraised at $175 million in April, down 71% from $605 million in 2014, when the mortgage was originated, according to loan documents. The debt was sent to special servicing in March 2022, and Blackstone said it would cease funding operating shortfalls at the building. The firm stopped also paying the mortgage.
In New York and cities across the U.S., office owners are reckoning with a market slammed by higher borrowing costs, declining valuations and a rise in remote work. Some are choosing to walk away from buildings, while others are opting to extend debt and hold on to properties.
While Blackstone is no longer putting any money into 1740 Broadway, Midland hasn’t foreclosed on the tower.
“We wrote this property off two years ago, and in the event a buyer is identified, we will work collaboratively to transfer the ownership,” a Blackstone spokesperson said.
Representatives for Midland and JLL didn’t immediately respond to requests for comment.
The building could be viable as an office-to-residential conversion, given the massive discount that the loan is getting, according to the people familiar with the matter.
The loan on 1740 Broadway is coming to market after deals froze last year amid geopolitical turmoil and uncertainty around soaring borrowing costs and declining property valuations. As central banks signal they’re winding down their rate-hiking campaigns, investors are gaining more confidence to transact.
This article was provided by Bloomberg News.