According to Bloomberg Media, the mortgage on 40 Wall Street in Manhattan, owned by the Trump Organization and former President Donald Trump, carries a 3.67% coupon and matures in July 2025, based on loan documents.
The tower’s occupancy rate has fallen from 98% at the loan’s 2015 origin to 77% as of June 30. Consequently, the mortgage has been transferred to a special servicer, with the Financial District building on a watchlist since February due to rising costs and vacancies.
Pre-negotiation letters facilitate discussions between borrowers and lenders prior to workout talks, potentially leading to loan modifications or, in severe cases, foreclosure. Special servicers handle CMBS loans in default or at risk of default.
Rialto Capital, the special servicer, has not responded to comment requests, as reported by Yahoo Finance via Bloomberg.
New York, like other U.S. cities, grapples with increased office vacancies since the pandemic-driven rise of remote work. Elevated borrowing costs have also lowered property values, prompting more landlords to abandon unprofitable buildings.
The portion of office CMBS managed by special servicers rose from 3.72% in the previous year to 8.55% in October, according to loan data from Daniel McNamara on Twitter.
Debt payments for the 72-story tower have been made through this month, with the outstanding balance on the $122.6 million mortgage (originally $160 million) detailed in loan documents.
A spokesperson for the Trump Organization asserts, “The loan is in full conformance,” claiming they have never missed a payment, paid late, or breached a loan covenant.
Despite facing a civil fraud trial, where New York Attorney General Letitia James accuses Trump of inflating his wealth, Trump denies wrongdoing and insists on a higher net worth. The potential default adds to the growing financial pressures on the former president.
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