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. Image Capital is listed as the owner of the property. Indianapolis-based AMP Residential manages the property.
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. 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. 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.
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.
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.
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. 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.
