Delinquency on Loan for Historic Detroit Tower

Mortgage Loan Delinquency

The Freddie Mac commercial mortgage-backed securities loan for the rental portion of the historic Detroit property Riverfront Towers, valued at over $80 million, has become delinquent after 30 days, as reported by Morningstar Credit to Multifamily Dive.

Image Capital, the property owner, and AMP Residential, the property manager, have not responded to requests for comment from Multifamily Dive. The property, which was once home to notable figures such as Rosa Parks and Aretha Franklin, has faced financial difficulties in recent years.

Loan Details

The loan, which was originated in June 2018, had an interest rate of 4.43% and a 10-year term. It was valued at $85.5 million, according to Yardi Matrix. The loan was put on Midland's watchlist in December 2023, and despite maintaining an 89% occupancy rate, it had a debt service coverage ratio of just 0.82x as of March 2024. Morningstar lists the loan value at $83.9 million.

About the Property

Riverfront Towers is a complex of three buildings. Towers 200 and 300 were constructed in 1983, and Tower 100 was built in 1992. During the real estate boom of the mid-2000s, Tower 300 was converted into condominiums, while Towers 100 and 200 remained rentals. However, these two towers have faced numerous challenges over the past 15 years.

Setbacks and Challenges

Morningstar Credit's report highlighted a series of setbacks the property has faced over the years. Several units were offline in 2020 and 2021 due to water-casualty losses, and COVID-19-related restrictions delayed repairs. Rising insurance premiums and difficulties in evicting non-paying tenants also posed problems. David Putro, head of commercial real estate analytics at Morningstar Credit, stated that while cash flow was down in 2023 due to bad debt from evictions, these issues have been minimal this year.

Ownership History

In 2016, Riverfront Tower Holdings LLC sold two of the three Riverfront Towers to Image Capital and private investors for $79.5 million. Prior to this sale, other owners faced legal issues with government service enterprises. In 2011, Fannie Mae sued owners Empirian at Riverfront LLC and Aintsar Riverfront LLC for $70 million for defaulting on a $55 million mortgage on the property.

Bottom Line

The story of the Riverfront Towers is a complex one, filled with historic significance, financial struggles, and legal disputes. It serves as a reminder of the challenges that can arise in the world of real estate and property management. What are your thoughts on this matter? Feel free to share this article with your friends and discuss it further. Don't forget to sign up for the Daily Briefing, which is available every day at 6pm.