(Bloomberg)—The owner of a Manhattan skyscraper tied to China’s HNA Group Co. filed for bankruptcy, saying the property’s outside manager botched the replacement of an important tenant, Major League Baseball.
PWM Property Management said it faces about $2.19 billion in liabilities while its assets, which include 245 Park Avenue in New York and a building in Chicago’s business district, are worth about $2.53 billion.
Three years ago, HNA listed the Manhattan property among the assets that it was putting up for sale as it marketed more than $40 billion of its holdings to cut its debt load. At the time, the building was valued by the company at $2.21 billion.
The property is run by New York real estate company, SL Green Realty Corp., which has been unable to replace the sports league despite MLB announcing it would move its headquarters out of 245 Park Avenue five years ago, according to court papers filed in Wilmington, Delaware. A representative of SL Green didn’t return a call requesting comment.
The failure to replace the baseball lease gave lenders the power to seize $19 million cash related to 245 Park Avenue as of Monday, PWM’s Chief Restructuring Officer Mohsin Y. Meghji said in a court filing.
“Potential cash sweeps by 245 Park Avenue’s mortgage lenders would deprive 245 Park Avenue of any excess cash for the foreseeable future, giving rise to significant long-term consequences,” Meghji said.
Should lenders seize cash, PWM Property may be unable to make mandatory dividend payments resulting in a forced sale of the Park Avenue building at a discount to SL Green, according to court papers.
In bankruptcy, PWM will try to replace SL Green as property manager while it restructures.
Tax authorities in Chicago and New York City were listed as the two biggest unsecured creditors, where it owes more than $23 million in property taxes.
The company said that the Chicago property is more than 90% leased and that the New York building is worth $122 million more than the debt it faces. The Park Avenue building is home to various financial services companies that have leases running through 2032, according to court documents.
The case is: PWM Property Management LLC, 21-11445, U.S. Bankruptcy Court, District of Delaware (Wilmington)
--With assistance from Ian Fisher and Linus Chua.
© 2021 Bloomberg L.P.