RFR, Kushner Cos. Win $480M Loan Extension for NYC Portfolio
WeWork will continue to lease space at the joint venture’s Brooklyn campus.
RFR and Kushner Cos. have obtained a four-year extension of the existing $480 million loan secured by their 750,000-square-foot mixed-use campus in the Dumbo Heights section of Brooklyn. The joint venture acquired the four buildings more than a decade ago, with Citi Real Estate Finance providing the debt in 2018.
The extension represents a turn in fortune regarding the buildings for the joint venture partners, who had defaulted on a $180 million CMBS loan associated with the properties in September 2023. A $145 million B note and mezz loans from Korean lenders totaling $155 million were also part of the properties’ debt load. A previous effort to refinance the properties earlier this year didn’t pan out, The Real Deal reported.
The partners didn’t provide the specifics of the transaction, though they reportedly have put in more equity. Neither provided additional details when queried by CPE.
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The companies also confirmed that they have completed a lease modification with coworking specialist WeWork to continue its occupancy at 77 Sands St., one of the buildings in the portfolio, as was reported about a month ago. WeWork—which has been shedding locations as part of its bankruptcy reorganization—previously planned to leave the site.
Eventually WeWork decided to stay, though in a smaller footprint than previously, down from the 72,000 square feet it leased in 2015 to a new total of 56,000 square feet. The coworking company is also paying lower rent, though it has agreed to pay $930,000 to cure its rent default at the property, according to the same source.
So far in New York City, WeWork has moved to assume 18 leases and reject five as part of its bankruptcy. One of the locations WeWork has rejected is its 300,000-square-foot Manhattan headquarters at 12 E. 49th St.
Besides 77 Sands, the RFR-Kushner Dumbo portfolio comprises 55 Prospect St., 81 Prospect St., and 117 Adams St. Other office tenants include Etsy and Brooklyn Laboratory Charter Schools. Retail and restaurant tenants include Abhaya Yoga, Vivvi, Ballet Slipper Spa, Springbone Kitchen and Randolph Beer.
Borrowers, lenders agree to further extensions
In the current turbulent capital markets environment, commercial loan extensions have become more common as borrowers and lenders struggle to avoid defaults or other financial headaches. A trend toward additional extensions came to the fore in 2023, the Mortgage Bankers Association reports.
Many of the commercial loans that were slated to mature last year were extended to mature this year, or in other coming years, according to the organization. Thus, the amount set to mature at the end of 2024 ballooned from $659 billion at the end of 2022 to $929 billion at the end of 2023.
Most loans facing a 2024 maturity are held by banks (25 percent), CMBS and CLOs (31 percent) and credit companies (36 percent). Relatively few are held by life companies.
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