While some members of the Chetrit family face legal challenges related to alleged tenant harassment, Michael Chetrit’s firm has managed to reach an agreement to restructure a significant loan for properties on Manhattan’s Upper East Side.
The Chetrit Organization modified its $714 million debt tied to Yorkshire Towers at 305 East 86th Street and Lexington Towers at 160 East 88th Street. According to a report by Commercial Observer, the changes bring the commercial mortgage-backed securities (CMBS) loan current, remove certain guarantees from the original deal, and extend the maturity date beyond June 2027.
The new terms follow several months of discussions with Rialto Capital and other lenders in both the United States and South Korea. The total debt includes a $539.5 million CMBS loan along with $174.5 million in mezzanine financing.
“This modification allows us to continue investing our time and resources into enhancing and stabilizing the property, ensuring it reaches its fullest potential,” said Michael Chetrit in a statement.
Anthony D’Amelio of Iron Hound Management coordinated the restructuring effort.
At the end of last year, the CMBS loan was transferred to special servicing due to financial concerns. Yorkshire Towers contains 692 units, about one-third of which are rent stabilized; Lexington Towers has 149 units with roughly half regulated under rent stabilization laws.
Plans had been made by Chetrit and Stellar Management’s Gluck family to renovate 311 apartments across both buildings. Combined, there are 305 rent-stabilized units between them. It remains unclear how many renovations were completed after financial issues arose that led to special servicing of the loan.
Net cash flow from these properties declined as occupancy rates dropped—from 97 percent when the original financing was secured in mid-2022 down to 89 percent by December 2023. During this period, revenue decreased by nearly a quarter while expenses increased by approximately one-sixth. At year-end, rental income still covered mortgage payments at a ratio of 1.6 times; however, this was down significantly from a coverage ratio of 3.6 recorded in 2022.
