The Bank of China has inked its second massive loan in a month, this time providing $498 million to an affiliate of Milstein Properties secured by a large Midtown office tower.
The New York branch of the Beijing-based bank issued the loan for Milstein’s 1.1 million-square-foot office building at 335 Madison Avenue on April 11, city records filed yesterday show. The loan provided $285 million in new funds and paid off an earlier 2003 securitized loan valued at $212.5 million. The loan term is seven years, a person familiar with the deal said.
“It is a nice property and the location and sponsorship fit [the bank’s] strategy,” the source said.
The building, between 43rd and 44th streets, has been impacted by the soft leasing market. While the tower is 82 percent leased, it has almost 50 percent of its space available, data from CoStar Group show, including a large block put on the market in January when Bank of America announced it would be leaving the building. Bank of America occupies about 230,000 square feet in the building on the fourth through seventh floors, Crain’s reported.
Milstein CEO Howard Milstein signed the loan document, public records show. It was not clear if any brokers were involved in the transaction. Howard Milstein did not immediately respond to requests for comment. The Bank of China declined to comment.
While it is not known what other lenders, if any, were competing for the business, insiders said that lenders — particularly portfolio lenders, life insurance funds and commercial mortgage backed security financing — were competing fiercely to lend against high-profile office properties, at times providing loans with interest rates around 3 percent. A recent example is a $130 million mortgage loan at 3.16 percent lent against 1501 Broadway.
“All of the major lenders are in the market for conservatively underwritten, well-located and well-sponsored real estate,” said Harold Baker, owner of the real estate finance firm Harold D. Baker & Co. He was not involved in the transaction.
A CBRE Group team of Edward Goldman, Jared Silverman and Stephen Siegel is marketing the vacant space at 335 Madison. There is “good activity” for the floors, a second source familiar with the space said.