Payments more than 15 days late would put the loan into default, according to the contract. But the agreement also says that Dranoff's obligation to make payments is limited to Victor's "available cash flow."
And cash flow has not been available, Dranoff said Tuesday.
"I'd like to say we're making money hand over fist at the Victor . . . but the property wasn't generating sufficient cash flow to pay this," Dranoff said.
Interest will accrue at 7 percent a year on the loan, which Dranoff said would be repaid in 2014.
"They will get whatever is due at that time," he said. "We've never missed a payment. We're not in default. We're pretty conservative, and we play by the rules."
Dranoff Properties owns and operates nearly a dozen commercial properties in the Philadelphia region and elsewhere, including Victor Lofts; Symphony House, a 31-story condominium building on South Broad Street; Venice Lofts in Manayunk; the Left Bank apartment building in University City; 777 South Broad apartments and retail three blocks south of Symphony House; and the planned Ardmore Station residential and retail development on the Main Line.
DRPA chief counsel Richard Brown said the port authority was looking into whether Dranoff could put off repayment of the loan.
The DRPA said in a statement Wednesday that it had "followed the process set forth in the loan agreement in seeking repayment of the loan. Victor Associates has advised us that they are not currently obligated to make loan payments under the terms of the loan due to a lack of cash flow and that therefore they are not in default under the loan agreement. DRPA is taking steps to verify the information provided by Victor Associates."
