Stellar’s One Soho Square Debt Sent to Special Servicing
The $800 million mortgage backing Stellar Management’s crown jewel office property has been sent to special servicing.
The transfer, which came at the request of the landlord, will allow Stellar to “explore a potential extension or other consensual modification,” according to Morningstar Credit Analytics data reported by Crain’s.
Stellar acquired the property in 2012 for $200 million before spending $268 million on renovations for the prewar buildings, installing a 19-story glass elevator tower between them.
In the last four years, however, the vacancy rate at the 800,000-square-foot property has doubled, hitting 14 percent at the end of last year. Cash flow at the property is also running well below projections.
One of the biggest tenants, Flatiron Health, may also be positioning itself for an exit. Flatiron, which occupies 28 percent of the property, has a pair of expirations coming up on its deal, beginning in 2031. It is already offering sublet space within its 225,000-square-foot holding — Yotpo took more than 30,000 square feet on a sublease in 2022 — raising concern it may be leaving.
Notable tenants at One Soho Square include the eyeglass company Warby Parker, fashion company MAC Cosmetics, healthcare insurer Aetna and Trader Joe’s.
There’s also $120 million in mezzanine debt backing the property, giving debtors the opportunity to seize in the event of a default. The $800 million mortgage still has two years before it comes due, though.
Stellar did not return a request for comment from the publication.
This year, Stellar elevated Matthew Lembo and Ryan Jackson, both long-term employees who previously served as managing partners, to co-chief executive officers.
For nearly 40 years, the company was run by Larry Gluck, who co-founded the firm with Steve Witkoff in 1985. They parted ways in 1997 when Witkoff became more interested in office properties and Gluck turned to multifamily properties.
Gluck died in June 2024 at 71 years old, 11 years after he was diagnosed with ALS.
Stellar’s portfolio is largely centered in New York City and includes more than 13,000 apartments and 3 million square feet of office and retail space.
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