The largest holder of New York City taxi-medallion loans is throwing lifelines to thousands of drivers struggling to survive a collapse in ridership caused by the coronavirus pandemic. Marblegate Asset Management LLC, a Greenwich, Conn., investment firm, has given about 2,000 medallion-owner drivers a loan payment holiday every month since mid-March. It has also continued a process that began last year of writing down medallion loans, in some cases deducting hundreds of thousands of dollars from struggling drivers’ debts to a ceiling of about $300,000.
Andrew Milgram, managing partner and chief investment officer of Marblegate said in an interview that Marblegate has so far forgiven $70 million of $215 million in debt attached to 483 medallions. About half of that debt, Mr. Milgram said, was restructured after New York City shut down because of the coronavirus pandemic.
Milgram said that average monthly payments for the loans that have been restructured have been reduced to about $1,500 from $2,800.
“We are constantly working to restructure loans because we believe it is the best approach to stabilize the industry, bolster drivers’ long-term economic prospects, and return value to our investors,” Milgram told The Wall Street Journal.
Marblegate became the largest holder of New York City taxi-medallion loans by scooping them up at a discount before the pandemic struck in March.
Once considered a rock-solid investment, many drivers borrowed against the value of their medallions to buy a home, put their children through college, or purchase a new vehicle. Between 2002 and 2014, medallion values rose from $200,000 to $1.3 million. However, risky lending practices and competition from a deluge of tens of thousands of app-based drivers caused values to fall back below $200,000.
There are roughly 13,500 medallions in New York. Marblegate owns about 4,000 loans on medallions. It also runs several hundred licensed vehicles from a garage in Long Island City, Queens, giving the firm insight into drivers’ earning potential.
The taxi and for-hire vehicle industry experienced a massive decline in ridership after New York City schools and businesses closed because of the pandemic. More than three-quarters of taxicabs were taken off the streets by April, according to a report by the Taxi and Limousine Commission. Average gross weekly driver earnings for those who were on the road this June were $813, according to the report, a 37% decrease from the same month last year.
Demand for rides has been particularly low in parts of the city where yellow cabs have traditionally found business. Most office workers still haven’t returned to Manhattan’s central business district and airline passenger numbers at major airports were down 82% in August from a low of about 98%.
Source: The Wall Street Journal