$215M pre-foreclosure at 681 Fifth Avenue

The trustee for a securitized loan pool filed a $215 million pre-foreclosure action against the owner of the office and retail building 681 Fifth Avenue, following an alleged payment default from 2023. The 58,824-square-foot building is owned by Metropole Realty Advisors, led by Robert Siegel.

The trustee Wells Fargo and the special servicer, Rialto Capital Advisors, on behalf of bondholders of Series 2016-UBS12 filed the complaint in New York State Supreme Court on January 10, 2024.

Court filings represent the position of one party and are not necessarily accurate or complete.

Case 650142/2024 LINK

This pre-foreclosure action follows others on Fifth Avenue, which has been hit by declining retail and office values in recent years. Despite that, Jeff Sutton’s Wharton Properties sold 720 and 724 Fifth Avenue for $835 million to Prada in December, part of a trend of retailers buying real estate.

In 2016, Metropole Realty Advisors, through the entity 681 Fifth Avenue LLC, borrowed $215 million from UBS, which then packaged the debt into the securitized pool. Tommy Hilfiger in 2019 shuttered its 22,000-square-foot retail location at the building, after opening the story in 2009. Metropole bought the building in December 2005 for $86 million.

The Commercial Observer reported in August 2023 that the loan was delinquent.

Metropole and the lender representatives signed a loan modification on April 19, 2023, a pre-negotiation letter agreement on October 10, 2023. However, the lender sent a default notice on October 2, 2023 and an acceleration notice on December 15, 2023.

According to the complaint, “Borrower also failed to pay all amounts due under the Loan Documents on each of the Monthly Payment Dates after July 6, 2023 (together with the July 2023 Payment Default, collectively, the “Payment Defaults”).”

The retail building in Midtown East has 58,824 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 42 feet and is 125 feet deep with a total lot size of 5,249 square feet. The zoning is C5-3 which allows for up to 15 times floor area ratio (FAR) for commercial and up to 10 times FAR for residential with inclusionary housing. The city-designated market value for the property in 2022 is $124.9 million.

Direct link to the property’s ACRIS page.