The owners of the InterContinental New York Times Square have exercised the first of four one-year extension options on a $188 million conduit loan.
The borrower is likely buying time to find suitable refinancing, Sean Barrie, a research analyst at Trepp, told Real Estate Capital.
“The financials on this deal are exemplary,” he said. “This doesn’t look like the borrower needs to work something out, like find a tenant or solidify financial performance, but that they just don’t have refinancing in their docket yet. Nothing else seems to be the cause.”
The 25-month floating rate loan — BAMLL Commercial Mortgage Securities Trust 2014-ICTS — was set to mature this month.
The transaction does not have subordinate debt, but it does include preferred equity in the amount of $177 million.
The loan went on Trepp’s watchlist in February, which is routine practice when loans approach their maturity.
The bank originated the loan in May 2014 to a consortium of limited liability corporations affiliated with Tishman Realty Corporation, city records show.
The InterContinental Hotel is a 607-room luxury hotel located at 300 West 44th Street at Eighth Avenue within the Times Square/Theatre District of Manhattan. The hotel’s total revenue dropped six percent last year, from $87.2 billion in 2014 to $82.4 billion in 2015.
At the time of issuance, Morningstar valued the property at $284.5 million using a capitalization rate of 7.80 percent, which was 43.21 percent lower than the appraised value of $501 million. The Morningstar value resulted in a loan-to-value (LTV) ratio of 66.09 percent for the first mortgage loan.
A Tishman affiliate purchased the property for $116.5 million from Harwood Properties in July 2007. The company did not respond to requests for comment.