By Leslie Shaver of Multifamily Dive,
The more-than-$80 million Freddie Mac commercial mortgage-backed securities loan for the rental portion of the once-iconic Detroit property Riverfront Towers has gone 30 days delinquent, according to a report Morningstar Credit shared with Multifamily Dive.
Image Capital is listed as the owner of the property, according to Yardi Matrix. Indianapolis-based AMP Residential manages the property. Neither firm replied to Multifamily Dive’s request for comment as of press time.
The complex was once home to civil rights activist Rosa Parks and singer Aretha Franklin, according to the Detroit Free Press. Coleman A. Young, mayor of Detroit for 20 years, also lived at the property.
The 10-year, $85.5 million loan at an interest rate of 4.43% was originated in June 2018, according to Yardi Matrix. It went onto Overland Park, Kansas-based servicer Midland’s watchlist in December 2023.
While the loan backing the towers remained current until September, it was below breakeven in 2023 and stayed that way through early 2024, according to Morningstar Credit. It had a debt service coverage ratio of just 0.82x as of March 2024, despite 89% occupancy. Morningstar lists the loan as being for $83.9 million.
Riverfront Towers consists of three buildings. Towers 200 and 300 were built in 1983, while Tower 100 was constructed in 1992, according to The Detroit News.
Tower 300 was converted to condominiums during the real estate frenzy of the mid-2000s, while Towers 100 and 200 remained rentals. However, those two buildings have faced many issues over the last 15 years. The company didn’t respond to a request for comment.
In its report, Morningstar Credit noted that the property had suffered a series of setbacks over the years. In 2020 and 2021, several units were offline because of water-casualty losses, and repairs were delayed because of COVID-19-related restrictions.
Rising insurance premiums and delays in evicting non-paying tenants were also issues, according to Morningstar Credit. While the servicer said that cash flow was down in 2023 because of bad debt from the evictions, those issues have “been minimal this year,” David Putro, head of commercial real estate analytics at Morningstar Credit, told Multifamily Dive.
In 2016, Riverfront Tower Holdings LLC sold two of the three Riverfront Towers to New York-based Image Capital and private investors for $79.5 million, according to The Detroit News.
Before that sale, other owners found themselves in trouble with the other government service enterprise.
In 2011, Fannie Mae sued owners Montvale, N.J.-based Empirian at Riverfront LLC and Monsey, N.Y.-based Aintsar Riverfront LLC for $70 million for being in default of a $55 million mortgage on the property, according to MLive.com.
