$506.3M pre-foreclosure filed for 3,500-unit A&E multifamily portfolio

Wells Fargo, as trustee for the bondholders of a $506.3 million loan, filed a pre-foreclosure action on Friday, January 31, 2025, alleging a maturity default of the loan that is secured by 31 entities that own 37 tax lots in Manhattan, Brooklyn, Queens and the Bronx with approximately 3,500 residential units, owned by A&E Real Estate Holdings. The multifamily assets include the large, approximately 1,200-unit rental complex Riverton Square in Harlem.
A&E Real Estate Holdings is the fourth-largest multifamily owner in New York City, according to a PincusCo analysis of property records, with more than 15,000 units.
JPMorgan Chase provided the original loan on June 8, 2021. The loan was securitized into J.P. Morgan Chase Commercial Mortgage Securities Trust 2021-NYAH Commercial Mortgage Pass-Through Certificates, Series 2021-NYAH.
Case LINK

The lender alleges the loan is in a maturity default. The servicer KeyBank sent a notice of default to A&E’s attorney dated June 11, 2024, just two days after the loan’s maturity date of June 9, 2024.

The borrower said this pre-foreclosure filing was part of a process with the lenders, and would not impact services to tenants.
“This is part of an on-going negotiation with both the senior and the mezzanine debt holders that will be resolved in the next 45 days and does not affect the operations of the buildings. A&E has always made and continues to make interest payments and will continue to maintain the highest standards at these properties for our residents,” a spokesperson for A&E Real Estate said in a statement to PincusCo.

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

In addition to Riverton Square at 2225 Fifth Avenue in Harlem, the portfolio includes the 200-unit building at 98-51 Queens Boulevard in Rego Park, the 41-unit building at 65 Ocean Avenue in Prospect Lefferts Gardens, and the 62-unit building 909 Sheridan Avenue in Concourse Village. (A full list of buildings is further down in the story.) In addition to the $506.3 million senior loan, the portfolio is encumbered with a $93.7 million mezzanine loan, securitized under the J.P. Morgan Chase Commercial Mortgage Securities Trust 2021-NYAH MZ.
Borrowers have struggled in recent years to refinance properties following the lending rate surge that started in 2022.

Rating agency Morningstar, in an analysis for the 2021 financing of the portfolio, described the properties as, “11 multifamily portfolios encompassing 31 properties, 53 buildings, 3,531 multifamily units, and 23,051 sf of commercial space located throughout the Bronx, Brooklyn, Queens, and Upper Manhattan boroughs.”
Morningstar Loan Analysis 2021 pdf

The 2021 analysis noted the high debt amount which came to $600 million inclusive of the mezzanine debt, relative to the value of the properties, could post a problem. “The high leverage point, combined with a lack of scheduled amortization, pose potentially elevated refinance risk at loan maturity.”

The analysis continues with, “The transaction sponsor acquired all properties in the portfolio between 2015 and 2017 for a total of $776.8 million and has a current cost basis of approximately $907.4 million. While the properties were originally built between 1915 and 1964, DBRS Morningstar considers its concerns with the older construction vintage to be mitigated by the sponsor’s significant investment of $130.6 million ($36,982 per unit) in capital improvements across the properties since acquisition. Specifically, the sponsor has completed $96.0 million ($27,202 per unit) of building wide capex and 1,255 unit renovations with an additional 227 unit renovations in progress at a cost of $34.5 million ($23,303 per unit).

The large Riverton Square complex was lost by a prior owner, Steller Management, in a 2010 foreclosure sale, and was later acquired by A&E. The Stellar Management default was seen as a cautionary tale for private equity and lenders alike.

The properties include 1326 Riverside Drive, 217 Haven Avenue, 227 Haven Avenue, 2170 Madison Avenue, 2181 Madison Avenue, 37-33 College Point Boulevard, 35-05 94th Street, 34-18 91st Street, 32-40 93rd Street, 32-50 93rd Street, 98-41 Queens Boulevard, 65-09 99th Street, 99-12 65th Road, 102-43 Corona Avenue, 109-05 120th Street, 87-14 129th Street, 139-09 34th Road, 139-08 34th Road, 143-45 Sanford Avenue, 38-05 Crescent Street, 39-25 65th Street, 39-89 50th Street, 41-46 50th Street, 41-45 52nd Street, 43-28 39th Place, 43-38 39th Place, 48-16 46th Street, 65 Ocean Avenue, 483 Ocean Parkway, 80 Woodruff Avenue, 100 Lefferts Avenue, 230 Ocean Parkway, 909 Sheridan Avenue, 910 Sheridan Avenue. 185 East 162nd Street.