Klövern, GDS finance 417 Park Ave with $100M in Swedish bonds

Partners bought out 29 co-op unit holders for $184M in February

New York /
Jun.June 04, 2020 11:00 AM
Photo illustration of GDSNY CEO Michael Kirchmann, Klövern CEO Rutger Arnhult and 417 Park Avenue (Google Maps, iStock)

Photo illustration of GDSNY CEO Michael Kirchmann, Klövern CEO Rutger Arnhult and 417 Park Avenue (Google Maps, iStock)

Klövern AB and GDS Development Management are set to finance their latest acquisition by tapping an uncommon source of capital for New York real estate: the bond market in Klövern’s home nation of Sweden.

The developers have secured a $100 million mortgage for the co-op building at 417 Park Avenue in Midtown East, according to property records filed Wednesday. The lender named on the document, Nordic Trustee & Agency AB, is acting as agent on behalf of Klövern’s bondholders in connection with $100 million in senior secured bonds, the document says.

Klövern, a publicly traded company in Sweden, has not released any disclosures about new bond issuances. The company most recently issued an unsecured bond series last May, denominated in Swedish kronor, according to its website.

Property records indicate that the 417 Park Avenue mortgage is the first New York senior mortgage ever issued by Nordic Trustee. Klövern and GDS did not immediately respond to requests for comment.

The financing structure, in which a trust company provides a mortgage and issues securities to investors, appears broadly similar to CMBS loans as well as secured Israeli bond issuances, both of which are more common in New York.

Klövern and GDS acquired the property for $184 million in February, buying out all 29 co-op unit owners, and are likely to take advantage of the Midtown East rezoning to build a larger office building. At the time of the acquisition, Klövern noted in a press release that it was “initially financed mainly with bank loans.”

The 417 Park site marks Klövern’s fourth acquisition in New York, all of which have been in partnership with GDS. Two ongoing developments, at 1245 Broadway and 322-326 7th Avenue, are now expected to be completed one quarter later than planned given the coronavirus disruption, according to Klövern’s latest interim report. The start of construction on a third project, at 118 10th Avenue, has been pushed back from this quarter to next year.

Klövern’s real estate portfolio is heavily concentrated in Sweden, with New York properties accounting for 8 percent of its property value and Copenhagen another 8 percent.


Related Articles

arrow_forward_ios
With a cooling trade war, stocks perform well, including real estate. (Credit: iStock)

Real estate stocks push up this week as U.S.-China trade tensions ease

Real estate stocks push up this week as U.S.-China trade tensions ease
416 West 25th Street and Maverick Real Estate Partners principal David Aviram (Credit: Google Maps and LinkedIn)

Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case

Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
One Madison Avenue and Marc Holliday (Photos via SL Green)

SL Green snags $1.25B construction loan for One Madison Avenue

SL Green snags $1.25B construction loan for One Madison Avenue
11 Penn Plaza and 120 Wall Street (VNO, Wikipedia Commons)

Manhattan’s top real estate loans post second best month since March

Manhattan’s top real estate loans post second best month since March
Square Mile Capital CEO Craig Solomon and The Real Deal's Hiten Samtani

WATCH: “It’s going to take longer, and it’s going to cost more”: Craig Solomon on the real estate capital stack

WATCH: “It’s going to take longer, and it’s going to cost more”: Craig Solomon on the real estate capital stack
OneTitle's Seth Brown (iStock)

OneTitle set out to change the title industry. Now it’s out of business

OneTitle set out to change the title industry. Now it’s out of business
The Scribner Building at at 597 Fifth Avenue and Joe Sitt of Thor Equities (Wikipedia Commons)

Thor delinquent on $105M loan at 597 Fifth

Thor delinquent on $105M loan at 597 Fifth
Pension fund investors are seeking to take cash out of real estate funds as property values fall, like at Water Tower Place in Chicago (Photo via iStock; Wikipedia Commons)

Core real estate funds delay investors from cashing out

Core real estate funds delay investors from cashing out
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...