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Overview

China Merchants Bank contributes $10 million USD to a $105 million USD tranche of a $125 million USD syndicated loan for the 100 West 125th Street 2017 Refinancing Project

Commitments (Constant USD, 2023)$10,641,264
Commitment Year•2017Country of Activity•United StatesDirect Recipient Country of Incorporation•United StatesOverseas Jurisdiction•United StatesSector•Business And Other ServicesFlow Type•Loan

Status

Project lifecycle

Pipeline: Commitment

Pipeline: PledgePipeline: CommitmentImplementationCompletion

Timeline

Key dates

Commitment date
Apr 17, 2017
First repayment (originally scheduled)
Apr 16, 2022
Last repayment (originally scheduled)
Apr 16, 2022

Geospatial footprint

Map overview

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The proceeds were to be used by the borrower to refinance 100 West 125th Street, a 200,000-square foot building in Harlem north west of Marcus Garvey Park at the Malcolm X Boulevard (also known as Lenox Avenue) in Manhattan, New York City, New York. Its exact address is 100 W 125th St, New York, NY 10027. More detailed locational information can be found at https://www.openstreetmap.org/way/249663782

Stakeholders

Organizations involved in projects and activities supported by financial and in-kind transfers from Chinese government and state-owned entities

Ultimate beneficial owners

At least 25% host country ownership

Funding agencies

State-owned Commercial Banks

  • China Merchants Bank Co., Ltd.

Cofinancing agencies

Private Sector

  • JPMorgan Chase Bank, N.A. (Chase Bank, formerly the Chase Manhattan Bank)
  • Morgan Stanley

Receiving agencies

Private Sector

  • Wharton Properties LLC

Loan desecription

China Merchants Bank contributes to $125 million USD syndicated loan for the 100 West 125th Street 2017 Refinancing Project

Grace period•5 yearsInterest type•UnknownMaturity•5 years

Collateral

This loan was secured by (i.e. collateralized against) 100 West 125th Street, a 200,000-square foot building in Harlem in Manhattan, New York City, New York.

Narrative

Full Description

Project narrative

On March 3, 2017, financial close was reached on a deal in which JPMorgan Chase Bank N.A. and Morgan Stanley entered into a $125 million USD loan agreement with Wharton Properties LLC — a real estate firm in New York City led by Jeff Sutton — for the 100 West 125th Street 2017 Refinancing Project. This loan consisted of a $105 million USD first mortgage (secured by 100 West 125th Street) and a $20 million USD mezzanine loan with an unknown breakdown to the main $125 million USD loan. This loan carried a maturity period of five years with interest-only payments for the full life (i.e. a grace period of five years). The proceeds were to be used by the borrower to refinance a $102 million USD loan from Natixis Real Estate Capital used for the construction of 100 West 125th Street, a 200,000-square foot building in Harlem north west of Marcus Garvey Park at the Malcolm X Boulevard (also known as Lenox Avenue) in Manhattan, New York City, New York. In or around April 2017, Morgan Stanley, as sponsor, approached the New York Branch of China Merchants Bank Co., Ltd. seeking a $26.25 million USD commitment for the $105 million USD first mortgage tranche. China Merchants Bank approved a commitment of $10 million USD to the syndicate. On May 8, 2018, Xin Wang, the former head of U.S. corporate banking, filed a lawsuit in the New York Southern District federal court against China Merchants Bank alleging that the bank was of discriminating against African-Americans and that she was fired for lodging complaints on the racial discrimination on its conduct, including a specific claim of racial discrimination for the $105 million USD syndicated loan. In April 2017, Xin and her employees requested that the bank loan $26.25 million USD to the syndicate, but in an internal memo on April 17, 2017, the bank's head of risk management, Jie Hu, cited a number of the loan’s “deficiencies”, claiming that Harlem “is not [a] high-class gathering place, and where the African population is more concentrated” (i.e. redlining). As such, China Merchants Bank only committed $10 million USD to the syndicate. After a series of complaints within the branch, Xin was fired on February 22, 2018, ostensibly because of organizational changes. Xin claimed she was fired after complaining to the bank's chief legal and compliance officer and sought lost wages and punitive damages. China Merchants Bank denied the accusations and stated that it would context them. Xin and China Merchants Bank settled the case on undisclosed terms on December 2019.

Staff comments

1. It is plausible, if not likely, that the specific borrowing institution was a special purpose vehicle subsidiary of Wharton Properties LLC. This issue merits further investigation.