$77M pre-foreclosure at Walter & Samuels Garment District office building

The special servicer for a $77 million loan secured by the Walter & Samuels’s 143,479-square-foot office building at 315 West 36th Street in the Garment District, Manhattan. The special servicer, Midland Loan Services, on behalf of Series 2018-COR3, filed the complaint in New York State Supreme Court yesterday. LINK

Bisnow reported in July 2023 that the loan was in default after co-working firm WeWork vacated its 135,000-square-foot lease in the building.

In February 2018, Deutsche Bank provided David Berley’s Walter & Samuels investment firm $77 million. That loan was packaged into a securitized loan product and sold to bondholders. Walter & Samuels is a major commercial landlord, with a concentration in the Garment District and Midtown South.

In February 2023, Fitch Ratings reported, “A top loan loss contributor, 315 West 36th Street (4.7%), is secured by a 143,479-sf office building with some retail located in Midtown Manhattan, proximate to Penn Station and the Port Authority Bus Terminal. Floors 11 and above of the building are residential and not part of the collateral. WeWork leases all the office space (93% of NRA) under two separate leases, which expire in February 2032 and May 2031. Fitch’s base case loss of 22% reflects a 9.25% cap rate and 25% haircut to the YE 2020 NOI to account for WeWork exposure, resulting in a stressed value of $297 psf.”

Direct link to Acris document. link