2017 was the year of the refi. Several landlords put trophy towers up for sale only to realize that demand wasn’t what they had hoped, and refinanced instead. And with a tsunami of loans from the boom year 2007 coming due, replacing them with new debt became a multibillion-dollar business.
Refinancings, most notably the $2.3 billion mortgage on the GM Building, dominate The Real Deal’s ranking of the biggest commercial real estate loans recorded in New York City in 2017. But the list also features a splashy acquisition loan and even a $1.5 billion construction loan. The CMBS market had a better year than skeptics feared amid new risk retention rules for loan originators. Several loans in our ranking were partially sold off as bonds.
One quick disclaimer: TRD’s ranking is based on public property records and only includes senior mortgages. This means, for example, that the $1.4 billion deal to refinance 5 Times Square is counted as a $782 million loan here because the rest is made up of mezzanine financing. Several big construction loans — such as a $900 million JPMorgan Chase mortgage to finance Extell Development’s Central Park Tower — haven’t hit public records in full or at all and weren’t included either.
1. GM Building, $2.3 billion
The GM Building made its owner, Boston Properties, a lot of money in 2017. In April, the real estate investment trust announced that it would refinance a $1.6 billion debt package on the office tower with a new, $2.3 billion mortgage. That’s more than $600 million in cash proceeds. And not only that: the company said at the time that the new interest rate of 3.43 percent would save it $9 million annually compared to the old loans.
Morgan Stanley led a syndicate of banks as lead arranger on the CMBS loan, which replaced a $1.3 billion Deutsche Bank mortgage and mezzanine debt.Boston Properties, Goldman Sachs and funds tied to Kuwait and Qatar bought the 1.8 million-square-foot Midtown office tower from Harry Macklowe in 2008 for $2.9 billion.
2. 245 Park Avenue, $1.75 billion
HNA Group’s acquisition of 245 Park Avenue was Manhattan’s biggest property sale of the year, so it’s only fitting that the mortgage is near the top of our ranking. The Chinese conglomerate funded the deal with a $1.75 billion loan from a consortium of banks led by JPMorgan Chase. The bank reportedly took on 25 percent of the loan, with Deutsche Bank, Barclays, Natixis and Societe Generale taking care of the rest.
The loan-to-value ratio of almost 80 percent was a statement of confidence in the borrower. Now, months later, HNA looks like it’s standing on much shakier ground. In June, Bank of America told its investment bankers to stop working with HNA over its opaque ownership and large debt burden.And last week the Hainan-based company announced that it plans to sell $6 billion in real estate to pay off its debts. 245 Park is not on the for-sale list… for now.
3. 50 Hudson Yards, $1.5 billion
Related Companies hauled in the largest construction loan of 2017. In September, the developer closed on a $1.5 billion senior loan to fund its office development 50 Hudson Yards from a consortium including Bank of China, Deutsche Bank, Wells Fargo, HSBC and Sumitomo Mitsui Banking Corporation. A week earlier, the Japanese firm Mitsui Fudosan had bought a 90-percent stake in the project.
With a price tag of $4 billion, the 985-foot-tall tower is set to become the single most expensive office development in the city’s history. Asset manager BlackRock signed an 850,000-square-foot lease to anchor the 2.9 million-square-foot building. With the latest mortgage, Related and its partners have raised more than $18 billion in debt and equity for the first phase of Hudson Yards.
4. 280 Park Avenue, $1.075 billion
Boston Properties wasn’t the only landlord that cashed in on a trophy office tower in 2017 without actually selling. In August, SL Green Realty and Vornado Realty Trust closed on a $1.2 billion loan package, including a $1.075 billion senior mortgage, to refinance 280 Park Avenue.
The CMBS loan from a group including Deutsche Bank, Barclays, Citi Real Estate Funding and Goldman Sachs Mortgage Company replaced a $900 million mortgage that was issued in 2016 and was set to mature in 2023. The new, interest-only loan runs through 2024 and has an interest rate of 1.73 percentage points over Libor. The lenders cut the mortgage into seven securities packages and sold it off to bond investors.
SL Green and Vornado took control of the tower in 2011, buying out Atlanta-based Invesco. The 43-story office building is home to the new Four Seasons restaurant.
5. 1 Liberty Plaza, $784 million
It’s been a busy year for 1 Liberty Plaza. Insurer Aon, cosmetics company New Avon and media outlet Business Insider signed leases at Brookfield Property Partners’ Financial District office tower, which entered 2017 with substantial availabilities. The Blackstone Group agreed to buy a 49 percent stake in the 2.3 million-square-foot property this month, valuing it at $1.55 billion. And to top it all off, Brookfield refinanced the property with a $784 million loan from Morgan Stanley in August.
The new mortgage replaces a $850 million Goldman Sachs loan, which closed near the peak of the market in 2007.
See more 2017 year end reviews here
6. 5 Times Square, $782 million
Refinancing a $1.4 billion mortgage is rarely an easy endeavor, and RXR Realty and David Werner relied on plenty of mezzanine financing to get it done at 5 Times Square. Morgan Stanley led a syndicate on a $782 million senior mortgage in March and the developers secured an additional $618 million in mezzanine debt, sources told TRD at the time.
A group of investors led by Werner bought the tower for $1.5 billion in 2014; he sold a 50-percent controlling stake to RXR for $800 million in 2016. Accounting and consulting firm EY — which is moving to 1 Manhattan West — currently occupies more than 90 percent of the building. The old mortgage was part of a $90 billion wave of CMBS debt that was issued in 2007 and came due last year.
7. Olympic Tower, $760 million
In May, a $760 million mortgage to refinance Crown Acquisitions’ Olympic Tower hit public records. At the time, sources told TRD that the loan was part of a $1 billion financing package, but that an additional $240 million in debt had yet to show up in the Department of Finance’s online database (as of late December, it still hasn’t).
Deutsche Bank, Goldman Sachs and Morgan Stanley are the lenders. Crown and partner Oxford Properties Group paid $418.9 million for a 50 percent stake in the 53-story, 906,000-square-foot building at 641 Fifth Avenue in 2012. Three years later they bought the remaining 50 percent from the Onassis Foundation for $652 million.
8. Putnam Portfolio, $714.7 million
In 2016, TRD reported that Brookfield and Urban American Management were considering selling the massive Putnam Portfolio, which counts nearly 4,000 apartment units. In the end, they refinanced some of the multifamily buildings, which are scattered across Upper Manhattan. Wells Fargo is the lender behind $714.7 million in mortgages on 1940 First Avenue, 3333 Broadway, 1309 Fifth Avenue, 1890 Lexington Avenue and 1990 Lexington Avenue that closed in July.
Brookfield paid Urban American $1.04 billion for a majority stake in the 4,000-unit portfolio in 2014. Sources told TRD in 2016 that they considered the buildings to be collectively worth between $1.5 and $1.6 billion.
9. One Worldwide Plaza, $710 million
When New York REIT tried to sell its most prized asset, One Worldwide Plaza, in early 2017, the building’s $870 million mortgage proved to be one of the obstacles. Its interest rate of 4.6 percent and amortization costs were relatively high, and getting out of the loan early would carry a defeasance cost of $116 million, CEO Wendy Silverstein said during an investor call in September.
Rather than give up the entire 1.8 million-square-foot building, the struggling REIT, which is liquidating its assets, sold a 48.7 percent stake to SL Green and RXR, valuing the tower at $1.73 billion. The new owners landed a $1.2 billion financing package from a group of lenders led by Goldman Sachs. Property records show a $710 million senior mortgage.
10. 28 Liberty Street, $702.45 million
The Chinese government reportedly called out Fosun International for binging on debt (among other alleged sins), but that didn’t stop the investment firm from borrowing $702.45 million against its Manhattan office tower 28 Liberty Street in November. Property records list Deutsche Bank as the lender, but sources told TRD in October that HSBC was also involved and that Natixis and Credit Agricole. Sources also told TRD that the final loan amount would be $800 million.
Research by Adam Pincus and Yoryi De La Rosa
|Largest NYC loans recorded in 2017|
|1||GM Building||$2.3 billion||Boston Properties||Deutsche Bank, CitiGroup, Morgan Stanley and Wells Fargo||Plaza District|
|2||245 Park Avenue||$1.75 billion||HNA Group||JPMorgan Chase, Deutsche Bank, Barclays, Natixis and Societe Generale||Plaza District|
|3||50 Hudson Yards||$1.6 billion||Related Companies, Oxford Properties Group||Bank of China, Deutsche Bank, Wells Fargo, HSBC, Sumitomo Mitsui Banking||Hudson Yards|
|4||280 Park Avenue||$1.075 billion||SL Green Realty and Vornado Realty Trust||Barclays, Goldman Sachs, Deutsche Bank and Citi Real Estate Funding||Plaza District|
|5||1 Liberty Plaza||$784 million||Brookfield Property Partners||Morgan Stanley||Lower Manhattan|
|6||5 Times Square||$782 million||RXR Realty and investor David Werner||Morgan Stanley||Times Square|
|7||Olympic Tower, Fifth Avenue||$760 million||Crown Acquisitions and partners||Deutsche Bank, Goldman Sachs and Morgan Stanley||Midtown|
|8||Putnam Portfolio||$714.7 million||Urban American and Brookfield Properties||Wells Fargo||Upper Manhattan|
|9||World Wide Plaza||$710 million||New York REIT, RXR Realty, SL Green Realty||Goldman Sachs and Deutsche Bank||West Side|
|10||28 Liberty Street||$702.45 million||Fosun International||Deutsche Bank and HSBC||Lower Manhattan|
|Source: The Real Deal analysis of NYC Dept. of Finance loans recorded in 2017. Refinance deals with the same lender, mortgage spreader agreements or extensions were not included.|