June 27 (Bloomberg) -- Extell Development Co. transferred a $375 million loan on a luxury Manhattan apartment building to a mortgage servicer specializing in restructuring troubled debt, Fitch Ratings said today in an e-mail.
The loan sent to special servicer LNR Partners Inc. is backed by the Belnord, a 215-unit prewar rental property on the borough’s Upper West Side that Extell refinanced in 2006, according to data compiled by Bloomberg.
Underwriters assumed that the building’s rent-controlled units would “eventually roll to market rents” by April 2012, Bloomberg data show. Those plans were thwarted by an October 2009 ruling by the New York State Supreme Court that barred landlords who receive certain city tax abatements from increasing lease rates on stabilized apartments.
By then Extell, based in New York, had “completely renovated and upgraded a large number of units that are currently leasing for $15,000 to $20,000 per month,” according to loan servicer commentary last month compiled by Bloomberg. The ruling could force the owner to “roll back the rents on those units to the stabilized levels,” according to the commentary.
Extell President Gary Barnett and Tamar Rothenberg, vice president of marketing, didn’t immediately return phone calls seeking comment.
The loan’s underwriters assumed the building could achieve net operating income of $29.9 million, Bloomberg data show. Net operating income for 2010 was $12.6 million.
A three-bedroom, four-bathroom apartment at the Belnord is currently being offered for rent at $17,500 a month, according to the building’s website. A four-bedroom unit is listed for $18,000 a month.
The building includes ground-floor retail tenants such as as Gap, Club Monaco, CVS, and P.C. Richard & Son.
--Editors: Christine Maurus, Kara Wetzel
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