Yellowstone Real Estate has just acquired the defaulted commercial mortgage-backed securities (CMBS) loan at 1740 Broadway, according to information obtained by Commercial Observer.
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The company bought the loans on office assets previously owned by Blackstone for “just under $200 million,” according to a source familiar with the industry.
The acquisition is just the latest bond purchase by Yellowstone, the investment firm led by Isaac Hella, which has been on a string of turnaround deals in recent months. Yellowstone made headlines in September when it bought $106 million in defaulted bonds for the iconic New Yorker Hotel.
JLL's Steven Binswanger, Andrew Scandalios, Jennifer Zelko, Drew Isaacson and David Giancola led the bond sale, which achieved a purchase price of approximately $300 per foot.
Officials with JLL declined to comment, and Yellowstone officials could not immediately be reached for comment.
The 620,928-square-foot office building is located on Broadway between West 55th and West 56th Streets. Sources said the building has been used as an office building for nearly 75 years, but Yellowstone is now considering converting it into residential use.
Blackstone acquired 1740 Broadway from Vornado Realty Trust for $605 million in late 2014, but turned over the keys to the property in March 2022 after defaulting on payments on a $308 million CMBS loan.
Deutsche Bank originally began financing the building in November 2015 as part of the BWAY 2015-1740 SASB CMBS transaction.
Blackstone exited the asset after handing back the keys.
“We wrote off this property nearly three years ago and have now exited this investment,” a Blackstone spokesperson told CO, declining to comment on today's bond sale. “This is a rare occurrence within our approximately $600 billion portfolio of more than 12,000 assets and we are very proud of our track record, which speaks for itself.”
Blackstone has been significantly writing down its legacy investments in U.S. office buildings and began evaluating 1740 Broadway in 2017 as headwinds for U.S. office buildings began to blow. The CMBS loan for 1740 Broadway has been in special administration for more than two years and Blackstone has not made any payments on the building since it was sold, according to a source familiar with the asset.
Cathy Cunningham can be reached at ccunningham@commercialobserver.com