UPDATED, Dec. 28, 4:50 p.m.: Manhattan’s real estate finance industry had a rough start to 2016, as global bond-market turmoil brought CMBS lending to a virtual halt. But markets calmed starting in March, and commercial real estate lending returned with a vengeance. Interest rates were at historical lows throughout much of 2016, and property valuations were still high, creating an ideal environment for all those seeking to refinance. Brookfield Property Partners, for example, was so eager to lock in favorable terms on a $750 Million Loan For One New York Plaza that it agreed to a gap mortgage until the previous loan on the property expires.
But all the big-ticket office building loans can’t mask the near-absence of condo construction financing. Banks retreated from ground-up residential lending in 2016 amid fears of oversupply in the high-end condo market. Extell Development’s Central Park Tower, for example, could have conceivably made this ranking, but Gary Barnett hasn’t been able to land the $900 million construction loan he desires to build the 88-story tower at 217 West 57th Street. In mid-December, he refinanced an expiring $235 million loan on the property with a new one-year mortgage, meaning he will likely keep looking for a construction loan in 2017. HFZ Capital Group may be a little closer than Barnett with its condo development, “the Eleventh” at 76 11th Avenue in Chelsea. In October, The Real Deal reported that the firm is in talks with U.K.-based Children’s Investment Fund to land a $1.2 billion construction loan for the Bjarke Ingels-designed project.
Our ranking only includes senior mortgages filed in public records, which means two big construction loans didn’t make the cut. In September, SL Green Realty announced it had closed on a $1.5 billion construction loan for its One Vanderbilt office development from a syndicate including Wells Fargo, The Bank of New York Mellon, JP Morgan Chase, TD Bank and Bank of China. But the bulk of the loan has yet to hit public records. And in November, GID Development and Henley Holding landed a $1.23 billion construction loan for the Waterline Square megadevelopment on the Upper West Side from a syndicate including Wells Fargo, HSBC, JPMorgan Chase and the National Bank of Abu Dhabi. But the loan is split up into six mortgages on individual buildings within the development, and none of the mortgages is big enough to make the ranking.
If HFZ, Extell and a handful of other developers succeed in landing the loans they are in the market for, 2017 could shape up to be the year of big condo construction financings. But in 2016, office properties dominate our ranking of the 10 largest real estate loans:
|9 West 57th Street||Solow Realty & Development||$1.2 billion||JPMorgan Chase|
|Hudson Yards||Metropolitan Transportation Authority||$1.06 billion||Goldman Sachs|
|1285 Sixth Avenue||RXR Realty||$1.03 billion||AIG|
|10 Hudson Yards||Related Companies, Oxford Properties Group, Allianz||$900 million||Deutsche Bank, Goldman Sachs|
|280 Park Avenue||SL Green Realty, Vornado Realty Trust||$900 million||Deutsche Bank|
|225 Liberty Street (Brookfield Place)||Brookfield Property Partners||$900 million||Citibank, Deutsche Bank, Wells Fargo|
|1301 Sixth Avenue||Paramount Group||$850 million||AXA, MetLife, New York Life|
|787 Seventh Avenue||CalPERS||$780 million||Deutsche Bank|
|One New York Plaza||Brookfield Property Partners||$750 million||Wells Fargo|
|770 Broadway||Vornado Realty Trust||$700 million||Morgan Stanley|
1) 9 West 57th Street, $1.2 billion (JPMorgan Chase)
Sheldon Solow’s office tower 9 West 57th Street, which overlooks Central Park, has commanded some of the highest office rents in the city and counts several hedge funds among its tenants. So It’s no surprise lenders are willing to dish out big bucks on the 1.7-million-square-foot property. In August, Solow closed on a $1.2 billion CMBS loan from JPMorgan Chase with a 10-year term. The mortgage reportedly replaced a $625 million CMBS loan from Deutsche Bank that was issued in 2011 and set to mature in 2017. The loan helped catapult JPMorgan Chase to the top rung in Commercial Mortgage Alert’s ranking of top U.S. CMBS issuers through the first three quarters of 2016, with $7.6 billion in deal volume.
2) Hudson Yards/MTA, $1.06 billion (Goldman Sachs)
The Metropolitan Transit Authority made history in September by selling its first-ever batch of municipal bonds backed by real estate properties. The state agency, which manages New York’s subway and bus system, will pay the bonds with income from renting out land at Hudson Yards to developers. Goldman Sachs underwrote the bonds, which hit the market in September. They mature in 2046, 2051 and 2056 and Goldman initially priced them at interest rates between 1.88 and 2.63 percent. According to a JLL assessment cited in bond documents, the total value of the Western Rail Yards land backing the issuance is between $3.2 billion and $3.7 billion. The MTA plans to use the money to maintain and expand its existing transit system.
3) 1285 Sixth Avenue, $1.03 billion (AIG)
New York’s office market has long recovered from the 2008 crash. In case we still needed proof: None other than AIG — of post-crisis bailout infamy — backed RXR Realty’s $1.7 billion acquisition of 1285 Sixth Avenue with a $1.03 billion loan in June. Morgan Stanley added another portion of the debt, bringing the total financing package to around $1.2 billion. RXR bought the 42-story, 1.8 million-square-foot office tower from AXA Financial, the U.S. arm of French insurer AXA, in May. Scott Rechler’s firm also reached a deal to extend UBS Bank’s 900,000-square-foot lease at the tower through 2032.
4) 10 Hudson Yards, $900 million (Deutsche Bank, Goldman Sachs)
In August, Related Companies, Oxford Properties Group and Allianz refinanced the office tower at 10 Hudson Yards with a $1.2 billion CMBS financing package from Deutsche Bank and Goldman Sachs. The package consists of a $900 million senior loan and $300 million in mezzanine debt. The 52-story tower at the corner of 30th Street and 10th Avenue is the first completed building of the Hudson Yards megadevelopment. Its tenants include Coach, BCG, L’Oreal and SAP.
Related is a repeat customer of Deutsche Bank, which also funded its projects at 300 Lafayette Street, 511-525 West 18th Street, and the Hudson Yards retail building. Matt Borstein, the bank’s global head of commercial real estate, recently told TRD that the bank’s philosophy is “to be very important to your biggest clients on their most important projects.” Building up relationships is a key part of that strategy, he said, because developers are “going to go to the guys they worked with in the past.”
5) 280 Park Avenue, $900 million (Deutsche Bank)
Deutsche Bank topped TRD’s October ranking of the biggest lenders on cash-flowing properties in New York City by a wide margin, dishing out $3.8 billion between January and August. The biggest single issuance of the batch was a $900 million May loan to refinance SL Green Realty and Vornado Realty Trust’s 1.25-million-square-foot office tower 280 Park Avenue. Like most refinancings of 2016, the three-year loan (with four one-year extension options) brought the borrowers big interest-rate savings: at a rate of 2 percentage points over Libor, it is significantly points cheaper than the previous debt, which had an interest rate of 6.35 percent.
6) 225 Liberty Street/Brookfield Place, $900 million (Citibank, Deutsche Bank, Wells Fargo)
Deutsche Bank also had a hand in another $900 million loan, this one refinancing Brookfield’s office building at 225 Liberty Street in January. Citibank and Wells Fargo were also part of the consortium. The 10-year mortgage carries a fixed interest rate of 4.66 percent and replaces a previous $340 million loan that matured in the first quarter. Brookfield spent around $250 million renovating the eponymous Lower Manhattan office complex that 225 Liberty is a part of. Last month, news broke that the Toronto-based investment firm is shopping a 49-percent stake in the complex at an asking price that would value it at around $5 billion.
7) 1301 Sixth Avenue, $850 million (AXA, MetLife, New York Life)
With interest rates at record lows and property valuations at record highs, it’s no surprise that trophy office refinancings dominate this ranking. Paramount Group certainly didn’t say no to borrowing $850 million at an initial weighted interest rate of 2.77 percent in October on its 1.8-million-square-foot office tower 1301 Sixth Avenue. AXA Equitable Life Insurance Company, MetLife and New York Life are the lenders on the mortgage, which expires in 2021. In a statement, Paramount said it would use the money to pay off debts at other properties and fund the acquisition of San Francisco office building One Front Street.
8) 787 Seventh Avenue, $780 million (Deutsche Bank)
AXA Financial didn’t just sell 1285 Sixth Avenue to RXR earlier this year, it also raked in another $1.9 billion by selling 787 Seventh Avenue to the California public pension fund CalPERS. It was one of the priciest real estate deals in New York’s history. Deutsche Bank backed the acquisition, which close in late January, with a $780 million loan. Tenants in the 1.7-million-square-foot, 51-story tower include Swiss bank UBS.
9) 1 Water Street, $750 million (Wells Fargo)
Brookfield is busy developing the $8 billion-plus mixed-use complex Manhattan West, so it’s good the firm can use refinancings to free up some extra cash. In March, it landed a $750 million mortgage from Wells Fargo on its 2.59-million-square-foot office tower One New York Plaza (a.k.a 1 Water Street). The loan replaced a $400 million CMBS loan issued by Lehman Brothers and Goldman Sachs back in 2006. Following Lehman’s bankruptcy that loan had passed through several trustees and was most recently overseen by U.S. Bank. Morgan Stanley is the biggest tenant at the building, taking around 1.2 million square feet.
10) 770 Broadway, $700 million (Morgan Stanley)
Property values in the Astor Place area have surged over the past decade, and Vornado stood to benefit. In May, the real estate investment trust refinanced the 15-story, 1.1-million-square-foot property with a $700 million mortgage from Morgan Stanley Mortgage Capital Holdings, replacing a $363 million Credit Suisse CMBS loan from 2016. Office tenants in the building include J.Crew, AOL and Facebook. Vornado bought the building for a paltry $149 million in 1998. The former Wanamaker’s department store, built in 1906, was converted into office space in the 1950s. It includes 166,000 square feet of retail space.
Note: this article has been updated to clarify that the ranking only includes publicly recorded mortgages.