C
IM Group, a real estate lender, developer, and operator, has foreclosed on an Arch Companies-owned boutique office space in Manhattan. This move follows months of turmoil for Arch, including internal disputes and financial difficulties.

    The foreclosure stems from Arch's failure to make debt payments on 88 University Place, a 94,000-square-foot property built in 1906. The troubles began when WeWork co-founder Adam Neumann partnered with fashion designer Elie Tahari to acquire the building in 2015 for $70 million. WeWork leased out 90,000 square feet of space and subleased 70,000 square feet to IBM.

    However, concerns about a potential conflict of interest due to Neumann's involvement in both WeWork and 88 University Place arose as WeWork prepared for its IPO launch. The COVID-19 pandemic further exacerbated the building's challenges, leading to IBM's departure and significant vacancy.

    In 2022, Arch Companies acquired a stake in the property and obtained a $71 million loan from CIM Group for renovation purposes. However, the lender began sending default notices to Arch Companies in 2023, alleging that the owners had defaulted on mortgage interest payments and mezzanine loan payments.

    Internal disputes between partners Jeffrey Simpson and Jared Chassen further complicated Arch's financial troubles, with Simpson accusing the Wiener family of a hostile takeover. The foreclosure at 88 University Place is one of several commercial real estate properties in Manhattan to experience Uniform Commercial Code (UCC) foreclosures due to rising interest rates and pandemic-related disruptions.

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