In addition to Todd English and Gulliver's Gate, Kushner signed National Geographic, whose "Encounter: Ocean Odyssey" promises an "incredible underwater journey" without any danger of getting wet. Bowlmor Lanes -- with bowling, an arcade and party spaces -- was already there. Neither tenant has been reported to have any problems.
The expected surge in income preceded a new appraisal in October 2016 at $445 million plus additional cash in accounts, indicating a stunning growth in value that far outstripped the broader Manhattan retail market, which had suffered a slowdown. Against that valuation, the $370 million of loans represented only 83 percent of the value, the investor disclosures showed. But Moody's and Kroll, the risk-assessment firm, found in independent calculations that the loans exceeded the value.
Deutsche Bank's $285 million loan to Kushner Cos. was divided into four trusts with pieces of other loans to be sold to investors as commercial mortgage-backed securities. All told there are 163 loan pieces in the trusts, but only seven have been flagged on watch lists -- including the four Kushner chunks. The Kushners received another $85 million in high-interest loans from SL Green Realty Corp. and Paramount Group.
In determining how much in interest payments the property could handle, underwriters estimated that costs to manage it would run about $4 million, disclosures show. If it achieved full rent of $24 million, that would indicate a modest cushion after making interest payments: about $18 million annually, according to data compiled by Bloomberg. But any loss of tenants with no immediate replacements could change those numbers quickly.
The situation might get worse before it gets better. In an October legal complaint against the Plaza Hotel, which contains a Todd English restaurant, the chef is accused of sexual harassment. In November, S&P downgraded the debt of another tenant, Guitar Center, saying it thought a potential debt restructuring could occur in the next six months, "a transaction that we would view as tantamount to a default." A Guitar Center spokeswoman declined to comment.
Entertainment venues are more likely to experience money crunches in an economic slump than traditional retailers, Kroll said in its March report on the property and its debts. "This may subject the loan to increased risk of default and loss," the firm said.
Still, there are worse venues to hunt for new tenants than Times Square, which commands the highest retail rents in the city after Fifth Avenue.
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