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The mortgage on the Manhattan tower at 40 Wall Street, formerly owned by President Donald Trump, has been moved to a special servicer. The Financial District building has faced challenges since February, marked by rising costs and increasing vacancies.
Key Points:
1. Special Servicer Involvement: The commercial mortgage-backed security for 40 Wall Street has been transferred to a special servicer. The building has been on a watchlist status since February due to escalating costs and higher vacancy rates.
2. Negotiations Underway: A pre-negotiation letter is being reviewed after contact with the borrower. While payments on the 72-story tower’s debt have been current through this month, challenges have prompted discussions between the borrower and lenders.
3. Debt Details: The outstanding balance on the mortgage for 40 Wall Street is $122.6 million, down from the original $160 million, according to loan documents. The mortgage has a 3.67% coupon and matures in July 2025.
4. Trump Organization’s Response: The Trump Organization maintains that the loan is in full conformance, emphasizing a history of timely payments and adherence to loan covenants. The organization expressed pride in operating the building.
5. Legal Challenges for Trump: While dealing with the property’s financial issues, Trump is concurrently facing a civil fraud trial led by New York Attorney General Letitia James. The charges involve allegations of inflating wealth on financial statements, and potential fines and penalties are being pursued.
6. Office Market Challenges: The tower’s occupancy rate declined from 98% at the loan’s origination in 2015 to 77% as of June 30, reflecting broader challenges in the New York office market, including rising vacancies and property devaluation.
7. Special Servicer Trends: The move to a special servicer aligns with broader trends in the U.S., where office vacancies have surged, and landlords are grappling with financial challenges. The share of office commercial mortgage-backed securities (CMBS) managed by special servicers rose to 8.55% in October from 3.72% a year earlier.
8. Property Renaming: Separately, the owner of Trump International Hotel Waikiki in Hawaii announced plans to rename the property, ending a licensing agreement with Trump’s company and joining Hilton Worldwide Holdings Inc.’s brand.
9. Trump’s Wealth: Despite these challenges, Trump’s fortune is valued at $3.1 billion, an increase from $2.6 billion in 2021, as per the Bloomberg Billionaires Index.
In summary, the transfer to a special servicer marks a significant development for the 40 Wall Street property, adding to the broader challenges faced by Trump’s real estate portfolio.
