A commercial mortgage-backed security loan backed by former President Donald Trump’s namesake office tower in lower Manhattan has been transferred to a special servicer.
The $160 million loan for 40 Wall St., with a current outstanding loan balance of $122.9 million, has been moved to special servicer Rialto Capital, according to CoStar data. The Trump Organization took out the loan, with a fixed rate of 3.66%, in 2015. Portions of that loan were securitized in multiple commercial mortgage-backed securities offerings, including COMM 2015-CCRE24.
A loan in special servicing is often a sign that repayments are late or in jeopardy, or the property backing the loan is experiencing a significant deterioration in performance. But a Trump Organization spokesperson told Bloomberg, which reported on the action earlier, "The loan is in full conformance."
“We have never missed a payment, we have never paid late and we have never breached a loan covenant," the spokesperson told the news service. The company "will continue to operate this world-class building.”
The Trump Organization and Rialto didn’t immediately respond to CoStar News’ requests for comment.
The loan is current for payment, but the property performance has fallen below two key metrics, according to CoStar data. The nearly 1.2 million-square-foot property has seen its occupancy rate decline from about 98% to about 77% at the time of underwriting. The debt service coverage ratio, a measure of cash flow to pay off the loans, also fell below 75% of the original ratio.
The 72-story building, constructed in 1930 and with six two-story vaults set into the bedrock foundations, was once the world’s tallest building, according to the property website. Located across from the New York Stock Exchange, the building originally known as the Manhattan Company Building and once owned by Ferdinand Marcos, the former Philippines dictator, was sold to Trump in 1995.
It's one of the properties that the Trump Organization could lose control of as a result of New York Attorney General Letitia James’ lawsuit alleging Trump’s company fraudulently secured favorable terms in several transactions.
The decline in the building’s occupancy comes as the New York office vacancy rate, hurt in part by hybrid work schedules and corporate cutbacks, has reached a new record high of 13.7%. The Financial District, where the building sits, has an even higher rate of 21.2%, according to CoStar data.