Real estate: Some loans in 'technical default'

Loans that financed Long Island's largest real estate transaction, which allowed for the purchase of a group of office buildings in Woodbury, are in technical, but not monetary, default.

The technical default is because of worries about declining occupancy and because the loans are expiring and have yet to be renegotiated, according to Fitch Ratings and one of the owners.

A 32-building portfolio purchased by an investor group of CLK of Great Neck and Houlihan-Parnes of White Plains, in Westchester County, has been placed on what is known in the industry as "special servicing," Fitch analyst Britt Johnson said. Special servicing refers to real estate companies whose properties are in or about to go into default. Lenders place companies in such a status to allow them to work with advisers to help restructure their debt.

Loans on the 32 Woodbury buildings are up to date, Johnson said. "They remain current on their debt service, but currently they are in [technical] default" because of expiring loans and worries about occupancy and future tenancy, Johnson said.

Craig Koenigsberg, chief executive of Great Neck-based CLK, said, "We're negotiating extensions" with lenders. "They informed us it's not in their interest to take back the loans. Unfortunately, every loan in New York City, on Long Island and across the country" needs to be renegotiated.

The CLK/Houlihan-Parnes investors bought the buildings in 2005 from the Tilles Cos. in a deal valued at more than $300 million, one of the largest single-park acquisitions in Long Island's history.