Chetrit Organization refis tower with $220M from hedge fund HPS, prior debt had been in “imminent default”

By Varvara Budetti

The Chetrit Organization obtained a $220 million loan from the global hedge fund HPS Investment Partners secured by the office building at 850 Third Avenue in Midtown. The new financing came as a special servicer was handling the prior debt. The total debt was $320 million, The Real Deal reported earlier this month, but only the senior $220 million loan was recorded.

In June, the Commercial Observer reported that the original $177.2 million loan, provided by Natixis was in special servicing after facing “imminent default.” According to the report, Discovery Communications, which was the building’s top tenant, vacated after their lease ended in 2020.

Jacob Chetrit, through the entity 850 Third Avenue Owner, LLC was the signatory for the Chetrit Group. The deal closed on September 30, 2021 and was recorded on October 13, 2021.

The building was scheduled for a UCC foreclosure auction as recently as September 14, The Real Deal reported. That action was initiated by Harbor Group International through a $25 million junior mezzanine loan backed by the building.

The Chetrit Group could not immediately be reached for comment. HPS Investment Partners declined to comment on the loan.

The property has 574,675 square feet of built space according to PincusCo analysis of city data. The loan price per built square foot is $382 per the PincusCo analysis. (The price per square foot analysis is the transaction price divided by square feet as reported in public records and assumes no air rights have been sold.)

The owner bought the property on January 8, 2019, for $422 million.

Over the past five years, there have been 21 NYC Department of Buildings permit applications filed for this parcel valued at more than $20,000. There were 21 renovation/alteration projects (A2) applied for with a total estimated value of $9.1 million.

Within a 400-foot radius of 850 3rd Avenue, PincusCo identified five commercial real estate items of interests occurred over the past 24 months. Of those five items, five were loans above $5 million totaling $427.4 million. The most recent of the five was Billy Haugh which borrowed $5.9 million from New York Community Bank secured by the 66,386-square-foot, 113-unit rental (D6) on 155 East 52nd Street on May 5, 2021.

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