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(Bloomberg) — The mortgage on former President Donald Trump’s Manhattan tower at 40 Wall St. has been transferred to a special servicer.
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The Financial District building has been on watchlist status since February as costs and vacancies increased.
“Contact has been made with the borrower and a pre-negotiation letter is being reviewed,” according to a filing Friday on the building’s commercial mortgage-backed security.
Payments for the debt on the 72-story tower have been made through this month. The mortgage on 40 Wall St. has an outstanding balance of $122.6 million, down from an original $160 million, according to loan documents.
“The loan is in full conformance,” a Trump Organization spokesperson said in an email Friday. “We have never missed a payment, we have never paid late and we have never breached a loan covenant. We are incredibly proud of 40 Wall St. and we will continue to operate this world-class building.”
Trump is facing a civil fraud trial, with New York Attorney General Letitia James accusing the former president and co-defendants of duping banks, insurers and others by inflating his wealth on financial statements. James is seeking fines and penalties, including banning Trump from running a business in New York.
The former president has denied wrongdoing and says his net worth was far higher than the state claims.
Read more: Trump’s Wealth Has Jumped $500 Million Since He Left White House
A New York judge had issued an order earlier to dissolve some companies owned by Trump. That was temporarily delayed last month by an appellate judge as the civil fraud trial continues in Manhattan.
The mortgage on 40 Wall St. has a 3.67% coupon and matures in July 2025, according to loan documents. The tower’s occupancy rate dropped to 77% as of June 30 from 98% when the loan originated in 2015.
Pre-negotiation letters allow talks between borrowers and lenders to begin before workout discussions, which can lead to a loan modification or, in the most serious circumstances, a foreclosure. Special servicers are assigned to manage CMBS loans that are in default or at potential risk of default.
Representatives of Rialto Capital, the special servicer, didn’t immediately respond to requests for comment.
Like other US cities, New York is grappling with a surge of office vacancies since remote work became widespread during the pandemic. Rising borrowing costs also have depressed property values, and more landlords are walking away from money-losing buildings.
The share of office CMBS managed by special servicers climbed to 8.55% in October from 3.72% a year earlier, according to loan-data firm Trepp.
Also Friday, the owner of the Trump International Hotel Waikiki in Hawaii said it will rename the property, buying out a licensing agreement with the former president’s company and joining a brand in Hilton Worldwide Holdings Inc.’s system.
Trump’s fortune is valued at $3.1 billion, up from $2.6 billion in 2021, according to the Bloomberg Billionaires Index.
–With assistance from Erik Larson.
(Updates with Trump organization comment in fifth paragraph)
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