**Commercial Real Estate Foreclosure and Distress Activity Updates**
**Arbor Realty Trust Acquires Memphis Multifamily Portfolio via Foreclosure**
According to the Memphis Business Journal, Arbor Realty Trust, based in Uniondale, New York, has acquired six multifamily properties in Memphis through a foreclosure sale. Originally, Arbor provided $84.33 million in financing to Texas-based KeyCity Capital for the acquisition of 1,240 apartment units across the six properties in 2021. After KeyCity defaulted, the properties were auctioned and purchased by Arbor-affiliated Memphis 6 Port PO LLC for a total of $42.27 million.
**Denver Energy Center Acquired at Significant Discount**
The Luzzatto Company has added to its portfolio with the purchase of the Denver Energy Center at auction for $5.25 million. The nearly 900,000-square-foot complex, which once sold for $176 million in 2013, was previously acquired in a 2022 foreclosure auction by JPMorgan Chase for $88.2 million. Asher Luzzatto told the Denver Business Journal that residential conversion is being considered for at least one of the towers, continuing the firm’s trend of adaptive reuse projects in the area.
**Foreclosure Auction Scheduled for West Palm Beach Hospital Property**
A behavioral health hospital property in West Palm Beach is heading to auction following a $10.64 million foreclosure judgment. The South Florida Business Journal reports that East West Bank obtained a consent judgment against Sunshine Holdings 2019 LLC and related entities. The 50,154-square-foot hospital at 1041 45th Street, along with an 8,006-square-foot medical office at 4802 East Avenue, will go to court auction on November 17.
**600 California Street San Francisco Office Returns to Market**
More than two years after WeWork Capital Advisors (WeCap) defaulted on a $240 million loan secured by 600 California Street in San Francisco, the building is being prepared for sale by a court-appointed receiver. The San Francisco Business Times reports that Newmark has been hired to market the 359,880-square-foot tower. With guidance expected in the mid-$300 per square foot range, the building may be valued at approximately $120 million. The asset received a formal appraisal of $124 million in early 2024.
**Rialto Capital Puts Midtown South Manhattan Office Loan Up for Sale**
Rialto Capital Advisors, acting as special servicer for a $104.5 million CMBS loan secured by the 139,921-square-foot office property at 90 Fifth Avenue in Manhattan’s Midtown South, has retained Newmark to either sell the loan or the property itself, according to reporting by Trepp. With foreclosure proceedings already in progress, the property is being marketed as a potential conversion opportunity.
**Banner’s Hallmark Files for Chapter 11 Bankruptcy**
The legal entities operating nearly 40 Banner’s Hallmark stores in Virginia have filed for Chapter 11 bankruptcy protection. The Kansas City Business Journal notes that the company, managed by LBPO Management LLC and led by CEO Leonard Banner, is seeking to address seasonal cash-flow issues and renegotiate store leases. The filing includes 39 Hallmark Gold Crown locations situated in malls and shopping centers across the state.
**32 Avenue of the Americas Enters Special Servicing**
The $425 million loan backed by 32 Avenue of the Americas, a 1.2-million-square-foot office tower in Manhattan’s Hudson Square/Tribeca submarket, has been transferred to special servicing ahead of its November 2025 maturity date. According to Morningstar Credit, although the loan remained current during its term, the property has been significantly impacted by the post-pandemic decline in both occupancy and cash flow. The office tower is now only 57% occupied.
