Park Ave Office Tower Secures New Loan at a Cost of $250M

Ownership of the flagship tower at 277 Park Avenue has reached an agreement to refinance its $750 million mortgage. Provided by Deutsche Bank’s German American Capital Corporation in 2014, carrying a 3.6% interest rate, the loan due to mature in August 2024 included $500 million in unpaid existing principal plus a newly originated $250 million gap mortgage. Assuming the transaction is completed, the 5-year refinancing, which is half the length of term of the existing mortgage, was able to move forward upon Stahl’s estate agreeing to “kick in nearly $250 million worth of cash to provide an equity cushion,” according to reported information provided by bond-rating firm KBRA. News of such a large infusion of money for one of “Midtown’s premiere office buildings, with a well-regarded owner” — the estate of the late developer Stanley Stahl, was an eye-opener for real estate pros. At a time when banks are reducing their exposure to office buildings, it is increasingly becoming the norm of being told by lenders to “come up with fistfuls of dollars if they want new mortgages.” Valued by KBRA at $1 billion, the injection of additional cash will lower the debt burden on the 1.8 million-square-foot tower that recently underwent $120 million in improvements, while boosting reserves. Currently about 97% leased, its tenancy roster includes major tenant JPMorgan Chase, as well as” M&T Bank, which pays $83 per square foot, and Visa, which pays $107 a square foot for a top floor.” Some other recent similar transactions include a $375 million refinancing at 65 East 55th Street, with Blackstone Group putting a down payment of $155 million to secure the deal; and an agreement by SL Green Realty and Vornado Realty Trust to lower the debt burden at 280 Park Avenue by paying off a “$125 million mezzanine loan for just $62.5 million” which opened the door to the $1.075 billion refinancing of the tower.

Source:    https://www.crainsnewyork.com/real-estate/stahl-organization-puts-equity-new-loan-277-park-ave