CIM Group Faces Foreclosure Threat at 1440 Broadway

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Two years after allegedly defaulting on a nearly $400 million mortgage, the bill appears to be coming due for CIM Group and QSuper at 1440 Broadway.

The lenders behind the Times Square office building filed a foreclosure suit in Manhattan Supreme Court this week, Crain’s reported. The filing came a day after ratings agency Morningstar DBRS sounded the alarm over Amazon’s 2029 lease expiration.

CIM and QSuper, which has since become a division of Australian Retirement Trust, did not immediately respond to a request for comment from the publication.

JPMorgan Chase and Oaktree Capital Management originated the $399 million financing in March 2021, which was securitized into CMBS debt. A division of SL Green is the special servicer of the debt and the lawsuit filer.

QSuper purchased the building off West 40th Street in 2017 with CIM. But by 2023, the loan, backed by the property, landed in special servicing and investors were preparing to hand over the keys to their lender.

While that threat was averted, lenders placed the debt in special servicing again last June due to a balloon payment or maturity default, according to Morningstar Credit. The property’s debt service coverage ratio, measuring the owner’s ability to pay off debt, was poor, at only .15 before considering the loan’s rate cap.

The most important tenant at the building is Amazon, which expanded its presence at the Times Square building last year by adding 259,000 square feet to its holding at the building. Its footprint at the property is up to 560,000 square feet, an overwhelming majority of the 745,000-square-foot property.

Amazon’s space at the building is operated by WeWork. But the lease is due to expire in 2029, according to Morningstar, which said “significant capital” might be needed at that time.

Elsewhere in Times Square, Extell Development recently finalized $1.25 billion in construction financing for “The Torch,” including an $1.1 billion construction loan led by JPMorgan and a $150 million mezzanine loan.

The 60-story development at 740 Eighth Avenue is two-thirds complete and will feature a 1,800-room hotel, 130,000 square feet of advertising space, and a 250-foot amusement ride.

— Holden Walter-Warner