The Real Deal New York

Midtown East towers lead New York’s CMBS market in May

Three deals comprised $1.3B of $1.7B in new CMBS issuance
By Chava Gourarie | June 14, 2017 09:00AM

245 Park Avenue, 855 Third Avenue (credit: Google Maps) and 641-645 Fifth Avenue

Three single-asset deals backed by Midtown East trophy towers comprised the majority of new CMBS issuance in New York’s market in May, including the Olympic Tower, the recently-acquired 245 Park Avenue, and the Lipstick Building at 855 Third Avenue.

The three deals totaled $1.3 billion out of $1.7 billion in new securities issued in May, bringing the total CMBS market in New York this year to $60.3 billion, up 1.7 percent from $59.3 billion in April, according to Trepp data prepared for The Real Deal.

The delinquency rate in New York fell 34 basis points to 0.47 percent, the lowest level in 12 months, while nationally, the delinquency rate ticked down for the first time since July 2016, decreasing 5 basis points to 5.47 percent, according to Trepp.

The largest of the single-asset deals was a $500 million slice of a $1.2 billion acquisition loan on HNA Group’s 245 Park Avenue. The Beijing-based conglomerate paid $2.21 billion for the 44-story tower in March, funded by the acquisition loan, a $568 million mezzanine loan, and $524 million in equity from a consortium of banks led by JPMorgan Chase. The $500 million piece was securitized in a 10-year security, at a fixed 3.5 percent rate. The 1.7 million-square-foot building was 91 percent leased in April, with 80 percent occupied by financial services companies.

A second single-asset deal, backed by the Olympic Tower at 641-645 Fifth Avenue and several adjacent properties, consisted of a $480 million slice of a $760 million loan originated by Deutsche Bank, Goldman Sachs and Morgan Stanley. The borrowers, Oxford Properties Group and Crown Acquisitions, landed a total of $1 billion to refinance the property in May, including an additional $240 million in mezzanine financing. The $480 million slice has a 10-year term and a 3.95 percent annualized coupon rate. The adjacent properties count the likes of Cartier, Versace and Armani Exchange as tenants.

Two other single-asset deals were the $272 million loan on Ceruzzi Holdings’ Lipstick Building, originated by Credit Suisse, and a $143 million slice of a $250 million loan on JEMB Realty’s 75 Broad Street, originated by Natixis.

Elsewhere in the CMBS market last month was Sitt Asset Management’s Two Herald Square, which was disposed with a loss. SL Green Realty picked up the $250 million CMBS debt, which had matured in April. And Walton Street Capital, together with RXR Realty, made the June deadline on a 2007-era CMBS loan on 237 Park Avenue, with an $850 million mortgage from Morgan Stanley and Societe Generale.

(To view more of 2017’s financing transactions, click here)