SL Green Realty said it completed a $215 million deal to refinance 100 Park Avenue, a luxury office tower between 40th and 41st streets that it owns under a joint venture with Prudential Real Estate Investors.
Two German lenders, DekaBank and Helaba, led a group of banks in the refinancing of 100 Park Avenue. The other lenders include PB Capital, Westdeutsche ImmobilienBank AG and Modern Bank.
The deal is significant because it shows that experienced and financially stable developers will be able to finance new deals despite the weak lending environment stemming from the 2008 collapse of the capital markets, according to analysts.
“For those owners who can stabilize their portfolio and the debt service associated with it, they’re going to be in a better position to weather the ongoing storm,” said Steve Coutts, senior vice president of research at Studley.
The agreement calls for the venture partners to pay a fixed rate of 6.64 percent for the new mortgage, which matures in 2014. The deal includes two one-year options to extend, likely reflecting the uncertainly of a full market recovery. The deal allows SL Green and Prudential to retire an existing $175 million mortgage.
SL Green said the deal will generate $40 million in extra funds to the venture partners, who will use the money to finish up the renovations, go after new tenants and will wind up with some residual cash.
SL Green and Prudential in 2007 launched a $72 million program to upgrade 100 Park, originally built in the 1950s, into a 21st century office building so it could attract new corporate tenants at higher rents. The renovation included the upgrade of elevators, corridors, the addition of a marble lobby and a glass curtain wall.
The 36-story, 826,000-square-foot office tower was considered one of the biggest turnaround stories in recent years, winning several regional awards for the best renovated building of the year. Prior to the crash of the capital markets, the building was one of the first south of 42nd Street to command rents of more than $100 per square foot.
Asking rates at the building currently range from $58 per square foot to $75 per square foot, according to the SL Green Web site.
In August 2008, SL Green signed a 121,000-square-foot lease with the accounting firm of BDO Seidman for 15 years, raising the building’s occupancy to 80 percent full from 67 percent.
By January 2009, Wells Fargo Trade Capital signed a 10-year lease for 44,700 square feet and by June, Aetna Life Insurance signed a 10-year lease for 40,100 square feet.
The 100 Park agreement comes less than two months after SL Green entered a $145 million deal to refinance the Graybar Building near Grand Central Terminal.