Super fund QSuper hands back keys to NYC office tower
Industry super fund QSuper handed back the keys to a prime New York City midtown office tower after its investment went under water just 2½ years after valuing the asset at $US540 million ($855 million) on its books.
People gather at Bryant Park, a nearby attraction of 1440 Broadway. Victor J. Blue/Bloomberg
The decision to appoint a so-called special servicer to a $US399 million loan that backed its commercial real estate bet means QSuper faces a total loss on its position, now part of the $240 billion Australian Retirement Trust.
QSuper and Los-Angeles based CIM Group bought the 25-story 1440 Broadway tower in the heart of NYC in 2017 for $US520 million. The property, which is one block from Bryant Park and the New York public library, achieved the $US540 million valuation in early 2021.
The industry fund is a victim of multiple forces in Manhattan’s commercial real estate scene: the downturn in office occupancy, the US Federal Reserve’s monetary tightening, and being a landlord to the stricken WeWork.
Escalating financial trouble at its largest tenant and rising interest repayments strained cash flows, prompting a decision earlier this month to hand the title deed to its lender. US bank Wells Fargo was appointed special servicer to the $US399 million loan.
QSuper faced two options: walking away or tipping in more money.
The likes of Blackstone, Brookfield, Pimco and RXR have made similar decisions to strategically default on office-related debt this year amid a collapse in valuations.
A spokeswoman for ART did not comment. Sources, however, said the revised valuation was reflected in ART’s QSuper portfolio at the June 30 balance date. The Australian Financial Review reported that ART downgraded the value of some of
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