Not unlike 2017, this was a year for refinancings. From Larry Gluck and Vornado Realty Trust’s Independence Plaza to Brookfield’s 5 Manhattan West, many featured among the year’s biggest debt deals, alongside a handful of massive loans provided for acquisitions and construction.
This year’s largest deal, a $1.9 billion financing at the Times Square Dition Hotel, however, fell well short of last year’s top deal, the $2.3 billion refinancing of the GM Building.
The Real Deal’s annual ranking of 2018’s top 10 finance deals contain all the usual suspects: Tishman Speyer, Goldman Sachs, Brookfield, RXR Realty and Blackstone. But there was also room for non-traditional companies, including Delta Airlines, which is building out LaGuardia Airport, and Montefiore Health System, which secured over $1 billion dollars in bonds.
Topping out this year’s largest deal was the Natixis-led financing and acquisition package for Mark Siffin’s Maefield Development, which bought out its partners at the hotel above 701 Seventh Avenue in April. Following the deal, the property was valued at $1.53 billion. Two months prior, Maefield had signed a contract to buyout a group of New York heavyweights, including Steve Witkoff, Michael Ashner’s Winthrop Realty Trust, Howard Lorber’s New Valley and the Carlton Group’s late Howard Michaels.
Following the financing deal, the planned complex was to hold a 39-story tower containing a 452-key Marriott Edition hotel, with 76,000 square feet of retail and a 17,000-square-foot LED billboard sign.
It’s no surprise that a building in Hudson Yards, the largest private real estate development in U.S. history, secured two of the 10 biggest real estate loans this year. The larger of the two was secured by Tishman Speyer for its $3.7 billion office tower, the Spiral, a Bjarke Ingels-designed edifice layered with landscaped balconies. Blackstone, which provided the loan, closed on the deal in April. In addition to the debt portion, Tishman said it would put $1.9 billion in equity into the development, which is set to be completed in 2022.
It was a busy period for Tishman, which simultaneously locked down an 800,000-square-foot, 20-year lease at the building with pharmaceutical company Pfizer.
3. LaGuardia Airport, $1.383 billion
Further afield from typical Manhattan skyscrapers, Delta Airlines secured a massive bond issuance from Empire State Development and Bank of New York Mellon to fund the air carrier’s $4 billion makeover of LaGuardia. The project received approval in 2017 and will consolidate Terminals C and D into just Terminal C. The deal, which closed in May, was the largest in the outer boroughs that month.
In what appears to be the largest bond deal of 2018, Montefiore Health System secured a slew of state bonds for its Bronx medical center. Dormitory Authority of the State of New York (DASNY) issued $685 million in bonds on a portfolio of the hospital system’s facilities in the Bronx. In addition, Montefiore issued $482 million in bonds by itself in August. The DASNY bonds, which were a series of 2018 30-year revenue bonds, were used to pay off $240 million in previous bonds provided by the Federal Housing and Administration and the Government National Mortgage Association, and also paid MHS for $400 million in capital projects across its facilities.
The second of two Hudson Yards-area developments that secured the year’s biggest financings is Brookfield Properties’ project at 5 Manhattan West, on 10th Avenue between 31st and 33rd Streets. The loan, provided by German state bank, Landesbank Baden-Wurttemberg, New York Branch, was issued in April.
The new mortgage retired a $570 million loan provided by Wells Fargo, and came after Brookfield completed a $350 million redevelopment of the 2.2 million square foot building. JPMorgan Chase and Amazon are the building’s largest tenants, with 425,000 square feet and 360,000 square feet, respectively.
Another Times Square property also entered the top 10 biggest deals, with the developers of the massive entertainment complex, TSX Broadway, at 1568 Broadway, securing a heap of debt and equity. The developers, which include L&L Holding Company, Fortress Investment Group and Maefield Development, locked in a $1.13 billion construction loan from Goldman Sachs, to fund the build of a 669-key hotel, 18,000 square feet of signage and 75,000 square feet of retail. Separately, the developers secured a $780 million equity line this month, including a $200 million portion from Masayoshi Son’s Japanese investment firm, Softbank, and $400 million from UBS Group AG, bringing the total value of the project to $2 billion. Construction is expected to begin on the 46-story tower in January.
7. Starrett-Lehigh, $900 million
In its bid to redevelop the landmark Starrett-Lehigh building at 601 West 26th Street, RXR Realty pulled in a major transitional financing package from Morgan Stanley and New York Community Bank worth $250 million, which was recorded in city property records in September. However, media reports in September put the value of the loan higher, at $900 million, which would also retire $525 million in previous debt and an added $150 million that will become active once a new tenant signs a lease.
Built in 1930, the 19-story building at 601 West 26th Street was purchased by a partnership between RXR Realty and a Canadian pension firm in 2011 for $920 million.
Silverstein Properties doesn’t do small deals. So when it agreed to the $1 billion purchase of the ABC HQ complex of buildings, including the 420,000-square-foot, 22 story tower on 77 West 66th Street, it lined up an $800 million financing package from Deutsche Bank to fund the acquisition. The deal was the largest Manhattan loan granted in July.
According to reports, Silverstein is expected to either build a luxury residential or office complex after demolishing the existing buildings, including the 22-story tower.
Who said you can’t back out of negotiations? To fund the construction of his office-to-residential conversion of 1 Wall Street, Harry Macklowe had been seeking an $850 million from loan from JPMorgan Chase. But late in the talks, Macklowe’s firm switched directions and turned to Deutsche Bank, locking in a debt portion for $750 million in November. To make up for the lower-valued loan, Macklowe’s partner in the project, Qatari emir Hamad Bin Khalifa al-Thani (HBK), agreed to put up another $100 million equity in the project.
Macklowe and a previous partner, Sheikh Hamad Bin Jassim Bin Jaber al-Thani (HBJ), one of the world’s richest men and the former prime minister of Qatar, bought the 50-story tower from the Bank of New York Mellon for $585 million in 2014. (It’s unclear if HBJ transferred his stake to HBK.)
Rounding out the list was the refinancing of the three-tower luxury residential complex in Tribeca, Independence Plaza. The project, led by Vornado Realty Trust and Stellar Management, secured a Goldman Sachs loan in the form of a single-asset CMBS deal, Independence Plaza Trust 2018-INDP. The seven-year loan, reported in June, has a fixed interest rate of 4.25 percent. The development at 301 Greenwich Street, originally built in 1975, has 1,327 units, some featuring private outdoor terraces and views of the Hudson River. Larry Gluck, of Stellar, bought the tower in 2003, borrowing $575 million and turned the property into luxury rentals. But in 2011, Vornado recapitalized the property after Stellar’s debt fell out of balance.
The top 10 NYC financing deals of 2018
|1||Times Square Edition Hotel||701 Seventh Avenue||$1,900,000,000||Times Square||Maefield Development||Natixis|
|2||The Spiral||435 10th Avenue, 447 10th Avenue, 449 10th Avenue, 509 West 34th Street, 527 West 34th Street||$1,800,000,000||Hudson Yards||Tishman Speyer||Blackstone Group|
|3||LaGuardia Airport||83-00 23rd Avenue||$1,383,495,000||Astoria||Delta Air Lines||Empire State Development|
|4||Montefiore Medical Center||111 East 210th Street, 170 East Gun Hill Road, 3348 Rochambeau Avenue||$1,157,100,000||Norwood||Montefiore Medical Center||DASNY|
|5||Hudson Yards||368 10th Avenue, 450 West 33rd Street, N/A West 31st Street||$1,150,000,000||Hudson Yards||Brookfield Property Partners||Landesbank Baden-Wurttemberg|
|6||TSX Broadway||1568 Broadway||$1,130,000,000||Times Square||L&L Holding Company; Fortress Investment Group; Maefield Development||Goldman Sachs|
|7||Starrett-Lehigh||601 West 26th Street||$900,000,000||Chelsea||RXR Realty||Morgan Stanley; New York Community Bank|
|8||ABC Network HQ||121 West End Avenue, 147 Columbus Avenue, 149 Columbus Avenue, 30 West 67th Street, 47 West 66th Street, 77 West 66th Street||$800,000,000||Lincoln Square||Silverstein Properties||Deutsche Bank|
|9||One Wall Street Condominiums||1 Wall Street A, 1 Wall Street B||$750,000,000||Financial District||Macklowe Properties||Deutsche Bank|
|10||Independence Plaza||301 Greenwich Street||$675,000,000||Tribeca||Stellar Management||Goldman Sachs, Bank of America, Deutsche Bank, Société Générale|