One of Moinian Group's prominent properties is now in special servicing. A US$131.5 million Commercial Mortgage-Backed Securities (CMBS) loan was secured by 2 Washington Street, a 483,000 square foot, 22-storey mixed-use complex near the southern tip of Manhattan, which offered short-term rental apartments.
According to a notice from Morningstar Credit Analytics, cash flow issues led to the transfer of the CMBS loan to special servicing. The US$131.5 million loan is split across conduit transactions BMARK 2021-B29, BMARK 2021-B28, and 3650R 2021-PF1. The loans are scheduled to mature on 6 August 2031, Morningstar Credit reported. BMARK 2021-B29 and BMARK 2021-B28 are conduit transactions issued by Citigroup and Bank of America in 2021, while 3650R 2021-PF1 was securitised by 3650 Capital in the same year.
The cash flow problems at 2 Washington Street stem from the master tenant Sonder, a global hospitality company that marketed hybrid hotel-apartment units with fully furnished rooms, keyless digital access, and in-unit kitchens, all managed by Sonder staff. The company, specialising in short-term rentals, occupied 2 Washington Street – a property converted from a 1970s office building into residential units in the 2010s – in late 2020.
Sonder filed for bankruptcy in November 2025, shortly after Marriott terminated a licensing agreement. This left the company's approximately 9,000 rental units in over 40 cities in limbo following the collapse of its business model. “Sonder went bankrupt in November 2025 and ceased operations, effectively cutting off the majority of the property's cash flow,” Morningstar Credit wrote regarding 2 Washington Street.
The special servicing notice stated that 286 of the building's 345 rental units are designated by the City of New York exclusively for short-term rentals of a maximum of 30 days, explaining the hybrid hospitality business model. This classification makes it unlikely to convert the building into a purely multifamily property without appropriate zoning changes.
Before Sonder's bankruptcy, 2 Washington Street offered short-term studios, one-bedroom, and two-bedroom units, and featured amenities such as a 7,500 square foot Life Time Fitness centre, a golf simulator, a music room, as well as a rooftop terrace and co-working spaces. The 2 Washington Street building opened as an office complex in 1972 and is connected to 17 Battery Place, an iconic 31-storey Neo-Renaissance building completed in 1904 along the southern part of the Hudson River in Battery Park. The Moinian Group did not respond to requests for comment.
