Lenders have given the Socony-Mobil Building’s owners grace following a $525M loan default.

The CMBS loan backed by the office tower at 150 E. 42nd St. has been extended by three years to September 2027 and returned to its master servicer, according to an alert from Morningstar Credit.

The loan will continue to be cash-managed until the debt is paid off, Commercial Observer reported.

The 10-year, interest-only securitized loan matured Sept. 5 and wasn't paid off, causing it to be transferred into special servicing, Bisnow first reported.

The 42-story, 1.7M SF building is owned by investors David Werner and Mark Karasick, who bought the leasehold in 2014 for more than $900M. To fund the purchase, the investors took out a $700M loan from Morgan Stanley, broken into a $525M single-asset CMBS loan and a $175M mezzanine loan. Berkadia is the master servicer, according to an S&P Global Ratings report from July.

The partnership’s 99-year ground lease runs through 2113. Ground rent payments started at $20M annually and increased to $24M last year, according to S&P’s analysis.

In the report, S&P lowered its ratings on the debt as the building faces significant rollover risk in the coming years. A total of 15 leases, which make up 61% of the building’s net rentable area and 75% of gross rent, roll in 2028.

Wells Fargo, the largest tenant, announced in late 2023 that it will leave following its 2028 lease expiration. Approximately 2,300 employees in the building are expected to relocate to the bank’s new HQ in Hudson Yards.

Three other tenants have marketed either a portion or their entire space for sublease. The building has not signed a new lease since 2018 despite being nearly 12% vacant, as of last summer’s report.

The building is steps away from both Grand Central Terminal and the former Pfizer headquarters at 219-235 E 42nd St., which Werner and Metro Loft are converting into apartments.

The loan modification is the latest CMBS loan workout of a major New York office building. RXR and SL Green last week agreed to new terms with their special servicer on a $940M mortgage backed by Worldwide Plaza, a 1.8M SF office tower at 825 Eighth Ave.

Under their new agreement, loan reserves may be used to fund operating expenses and debt service shortfalls. However, there was no mention of an extension for the loan, which matures in November 2027, The Real Deal reported, citing Morningstar Credit.