Maefield Development’s splashy 20 Times Square project is back in financial triage. The CMBS loan on the property missed its May maturity date and has slipped into special servicing once again, reviving a debt saga that has been simmering right in the heart of Times Square for years. It is a reminder that uneven retail leasing and a single hotel anchor can turn even a high-profile Manhattan address into a puzzle that lenders would rather not solve.
Morningstar Credit reported that the loan tied to the Times Square Trust 2018-20TS deal was transferred to special servicing after failing to pay off at maturity, according to Commercial Observer. The outlet put the outstanding CMBS balance at roughly $647.5 million and noted that the debt sits on top of a 99-year ground lease, which makes any straightforward workout considerably more complicated.
Owners and the debt tangle
Maefield and Fortress Investment Group took control of 20 Times Square in 2018 after a financing package arranged by Natixis left about $650 million sitting on the bank’s balance sheet while other pieces of the capital stack were securitized. That split structure, combined with the sponsors holding both the leasehold and fee positions, created an unusual setup in which the partnership was effectively paying rent to itself. The built-in conflict has made it tougher to engineer a clean workout, according to The Real Deal.
How the loan got here
The loan first landed in special servicing in November 2022 after roughly $26.8 million in liens were filed against the property, and Wilmington Trust followed up with a foreclosure move in 2023, according to Bisnow. Maefield secured an extension toward the end of 2023, buying more time but not resolving the underlying debt, which set the stage for this spring’s missed maturity and the latest transfer back to special servicing.
Hotel, retail and the missing revenue
The 454-key Edition by Marriott remains the main revenue driver at 20 Times Square. The hotel reopened in June 2021 after pandemic-related closures, but both the rooms and the retail podium have underperformed the rosy leasing assumptions that underwriters once penciled in. An NFL-and-Cirque du Soleil experiential concept came and went in under a year, and several floors of street-level retail are currently being marketed for lease, according to LoopNet.
Market context
The latest transfer arrives at a time when CMBS special servicing rates have climbed into double digits, driven in large part by lingering office and mixed-use distress. That broader refinancing crunch has pushed lenders toward extensions and negotiated workouts instead of quick liquidations, a pattern that is likely to influence the special servicer’s strategy at 20 Times Square, according to Trepp data summarized by CRE Daily.
What is next for 20 Times Square
With the loan back in special servicing, several paths are in play. The servicer could try to hammer out a modification with the sponsors, line up a sale, or allow Wilmington Trust to keep pressing its foreclosure case. Any of those options comes with extra friction, thanks to the 99-year ground lease and overlapping mezzanine positions that crowd the capital stack. Nearly 50,000 square feet of retail at the base of the tower is currently being marketed, which could serve as a bargaining chip with creditors or a potential buyer, according to Commercial Observer.
Legal implications
Wilmington Trust’s 2023 foreclosure filing still hangs over the deal and remains a tool for bondholders, giving the trustee legal leverage if workout talks stall, according to Bisnow. With mezzanine lenders and overseas creditors also sitting in the structure, any endgame at 20 Times Square is likely to involve a negotiated mix of legal maneuvers, creditor concessions and potential asset sales rather than a simple courthouse auction.
