(Bloomberg) — The mortgage on former President Donald Trump’s Manhattan tower at 40 Wall Street has been transferred to a special servicer.
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The Financial District building has been on a watch list since February due to rising costs and vacancy rates.
“The borrower has been contacted and pre-negotiation letters are being reviewed,” according to a Friday filing regarding the building’s commercial mortgage-backed securities.
The debt on the 72-story tower was paid off this month. Loan documents show the outstanding balance on the mortgage at 40 Wall Street is $122.6 million, down from the original $160 million.
“The loan was fully compliant. We have never defaulted on a payment, never been late on a payment, and have never violated a loan covenant,” a Trump Organization spokesman said in an email Friday. “We are extremely proud of 40 Wall Street.” will continue to operate this world-class building. “
Trump is facing a civil fraud trial, with New York Attorney General Letitia James accusing the former president and co-defendants of defrauding banks, insurance companies and others by overstating their wealth on financial statements. James is seeking fines and penalties, including banning a Trump campaign business in New York.
The former president has denied wrongdoing and said his net worth is much higher than the state claims.
Read more: Trump’s wealth has grown by $500 million since leaving White House
A New York judge earlier issued an order to dissolve some companies owned by Trump. Last month, an appeals judge temporarily delayed the order as a Manhattan civil fraud trial continued.
The mortgage at 40 Wall Street has an interest rate of 3.67% and is due in July 2025, loan documents show. As of June 30, the building’s occupancy rate dropped to 77% from 98% when the loan was taken out in 2015.
A pre-negotiation letter allows the borrower and lender to begin negotiations before a resolution is discussed, which could result in a loan modification or, in the most severe cases, foreclosure. Designation of special servicers to manage CMBS loans that are in default or at potential risk.
Representatives for special servicer Rialto Capital did not immediately respond to a request for comment.
Like other U.S. cities, New York has faced a surge in office vacancies since remote working became popular during the pandemic. Rising borrowing costs have also pushed down property values, with more landlords abandoning money-losing buildings.
The share of office CMBS managed by special servicers rose to 8.55% in October from 3.72% a year earlier, according to loan data firm Trepp.
Also on Friday, the owner of the Trump International Hotel in Waikiki, Hawaii, said it would rename the hotel, purchase a licensing deal with the former president’s company and add the brand to Hilton Worldwide Holdings Inc.’s system.
Trump’s wealth is estimated to have increased to $3.1 billion from $2.6 billion in 2021, according to the Bloomberg Billionaires Index.
——With help from Eric Larson.
(Updates with Trump Organization comments in fifth paragraph)
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