Mortgage Payoffs Generate Gains for SL Green

The $61 million loan encumbering 690 Madison was paid off by SL Green at about 50 cents on the dollar according to a recent report. The property located in Manhattan’s Plaza district is home to the Richemont-owned luxury jewelry house Van Cleef & Arpels. Although it isn’t clear why lender the Bank of China “agreed to accept just $32 million to settle the $61 million loan,” the $26 million gain from the latest mortgage payoff in addition to further savings from the three other property mortgages similarly paid off by the REIT at less than owed generated more than $200 million in gains last year according to reported information revealed in the company’s 4th quarter earnings report. Last year’s other payoffs included the $7 million payoff of the $183 million mortgage at the mostly vacant commercial property at 2 Herald Square, the $125 million payoff in mezzanine debt for $62 million as part of the $1 billion refinancing of 280 Park Avenue, and the $32 million payoff of a $50 million mortgage on 719 Seventh Avenue. “Debt-extinguished” gains accounted for nearly 40% of SL Green’s $570 million in funds from operation — a key performance metric for real estate owners; and while it’s never easy to “persuade lenders to swallow losses,” being left to manage the properties themselves doesn’t leave banks with a favorable alternative.

Source:    https://www.crainsnewyork.com/real-estate/sl-green-pays-manhattan-mortgage-steep-discount