The hits keep coming for the Chetrits.
The $290 million CMBS loan backed by the office building at 26 Broadway was transferred to special servicing, Bisnow reported, citing Morningstar Credit. The transfer came after the Chetrits acknowledged they would have to discontinue loan payments.
Starwood Mortgage Capital and the Bank of Montreal originated the $290 million debt in 2022. A $40 million unsecuritized mezzanine loan was also acquired by Meyer and Joseph Chetrit.
Since then, it’s been a struggle at the Financial District property, also known as the Standard Oil Building.
Net cash flow has dropped approximately 30 percent from when the debt was underwritten. The debt service coverage ratio also collapsed to 0.76x, falling to exceed breakeven levels, as property insurance, utilities and maintenance costs have skyrocketed.
Occupancy is a big part of the story, too. When the debt on the 29-story, 840,000-square-foot building was underwritten in 2021, the building was 83 percent occupied. As of the end of the first quarter, occupancy is down to 75 percent, according to Morningstar.
The full Chetrit clan acquired the ground lease for the property in 2007 for $225 million. Three years later, Meyer and Joseph acquired the underlying land for $35 million, ahead of a split for the family company into the Chetrit Group and the Chetrit Organization (the former owns the Standard Oil Building).
The Chetrits did not immediately respond to a request for comment from the publication.
The debt transfer is the latest obstacle as Meyer and Joseph Chetrit’s problems continue to mount.
There’s a growing number of defaults and numerous legal judgments, including a $132 million court-ordered judgment to Maverick Real Estate Partners and a $39 million judgment related to fire damages at fashion designer Reem Acra’s property.
Meyer and Joseph were arrested in October for alleged harassment of tenants in a rent-stabilized building. Two septuagenarian occupants said they were without heat and an elevator and part of a ceiling had been in disrepair for some of their time at a Chetrit-owned Chelsea loft building.
City officials said they hoped that cracking down on two big-name developers would serve as a warning to landlords.
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