Korean firm that gave $205M in mezz loans to RFR says borrower’s principals owe $1.5M

The Korean firm KTB Asset Management which holds $205 million in 2017 mezzanine debt secured by an equity interest in RFR Holding’s 285 Madison Avenue, alleges RFR Holding principals Aby Rosen and Michael Fuchs have defaulted on a set of payments related to the loan, and together owe $1.5 million. The allegations were made in a complaint and related documents the lender filed yesterday in New York State Supreme Court in Manhattan. LINK
The amount they owe is just a small fraction of the entire debt.
Court records represent the position of one party and are not necessarily accurate or complete. RFR Holding has not responded in court filings.

In November 2017, RFR Holding borrowed a total of $475 million, through a $270 million senior loan led by Natixis, a $120 million senior mezzanine loan arranged by KTB Asset Management and an $85 million junior mezzanine loan, also arranged by KTB Asset Management.

The Commercial Observer reported in addition to KTB, five other Korean firms participated in the senior mezzanine, and three others participated in the junior mezzanine.

A portion of the Natixis senior loan, $235 million, was later securitized into NCMS 2018-285M. That loan was sent to special servicing two years ago, as the Commercial Observer reported in May 2022, with the owners seeking a loan extension.

According to the complaint, “This is a straightforward motion for summary judgment in lieu of complaint, in which Lenders seek to recover a total of $1,511,909.09 that Guarantors indisputably agreed to, but did not, pay under the Guaranties. Specifically, Senior Mezz Lender seeks to recover $1,067,195.41 that Guarantors owe, but failed to pay, under the Senior Mezz Guaranty. And Junior Mezz Lender seeks to recover $444,713.68 that Guarantors owe, but also failed to pay, under the Junior Mezz Guaranty.While Senior Mezz Borrower initially made some of these required payments and deposits, on February 12, 2024, it defaulted in that it (i) failed to pay $153,125 toward the Modification Fee, (ii) failed to pay $200,000 in Special Servicing Fees, (iii) failed to pay $60,000 toward the Lender Reimbursement Amount, and (iv) failed to deposit $654,070.41 toward the Interest Reserve Amount…While Junior Mezz Borrower initially made some of these required payments and deposits, on February 12, 2024, it defaulted in that it (i) failed to pay $17,708.35 toward the Modification Fee, (ii) failed to pay $141,666.70 in Special Servicing Fees, (iii) failed to pay $42,500 toward the Lender Reimbursement Amount, and (iv) failed to deposit $242,838.63 toward the Interest Reserve Amount.”

The property

The office building in Grand Central has 407,127 square feet of built space according to a PincusCo analysis of city data. The parcel has frontage of 150 feet and is 175 feet deep with a total lot size of 21,886 square feet. The lot is irregular. 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 $170.2 million.
Prior sales and revenue

This property was sold for $189.2 million on December 14, 2012.

The 407,127-square-foot property generated revenue of $29 million or $71 per square foot, according to the most recent income and expense figures.

Direct link to the property’s ACRIS page.