Lexin Capital Buys Back Its Defaulted Chelsea Office Loan at a Discount – Commercial Observer

Lexin Capital has snapped up the nonperforming debt on its own office property at 229 West 28th Street — also known as the Caxton Building — at a discount, Commercial Observer has learned. 

Aareal Bank (ARL) was the seller of the roughly $65 million loan, but the debt’s purchase price couldn’t immediately be ascertained. 

“We are very excited that we were able to recapitalize this investment at 229 West 28th Street,” Metin Negrin, founder and president of Lexin Capital, told CO in an emailed statement. “We remain committed to our property and just doubled down on our investment into it and have more reserves for future required capital improvements, tenant improvements and leasing commissions.” 

Negrin added that “while the NYC office market may not be out of the woods yet, it is a lot closer to the bottom in 2024,” and “we will continue to serve our current tenants and look forward to welcoming new tenants in the future.” 

Newmark (NMRK)’s Adam Spies, Adam Doneger, Chris Kramer and Avery Silverstein led the sale on behalf of Aareal. 

The 12-story building, between Seventh and Eighth avenues in Chelsea, spans 157,061 square feet and includes Universal Communications Network and Noom as office tenants, while event space company Rumi leases its retail space.

Lexin Capital acquired the building in March 2014, refinancing its acquisition debt with the Aareal loan in 2016. By 2020, the company was mulling a sale of the property, before experiencing a maturity default in December 2022 as leasing slowed amid a punishing office environment, The Real Deal reported 

In September, Aareal had moved to offload the defaulted loan, following the German lender’s sale of the debt on L&L Holding’s Metropolitan Tower and RXR’s 61 Broadway, TRD reported. 

Most recently, in early January, Aareal decided to offload the $110.6 million nonperforming senior loan on Meringoff Properties’ 462 Broadway, as CO previously reported. 

At the time the Caxton Building’s loan sale was launched in September, the building was 58 percent leased. Now, following Newmark’s marketed bidding process, the borrower has bought its loan back. 

Officials at Aareal Bank and Newmark declined to comment.

Cathy Cunningham can be reached at ccunningham@commercialobserver.com.