In 1992, Silverstein Properties’ 120 Wall Street became the first New York property to be designated an “association center,” providing financial incentives to not-for-profit tenants as part of a city initiative to keep them from leaving an increasingly expensive Manhattan.
A lot has changed in Lower Manhattan in the three decades since, as the submarket has emerged as a major destination for tech and media tenants migrating from Midtown. Silverstein’s building has welcomed a number of for-profit tenants, too.
Last September, Silverstein refinanced the 35-story tower on the East River waterfront with a $165 million CMBS loan from Wells Fargo, JPMorgan Chase and Citigroup, which has been securitized into three CMBS conduit transactions. Documents associated with those deals provide an inside look at the building’s finances.
As of August, the 670,000-square-foot property was 95 percent occupied by 28 office tenants, five telecom tenants and two retail tenants. The average annual rent comes out to $40 per square foot, according to loan documents.
Global advertising firm Droga5 is the largest tenant. In 2013, the company moved to the building from its old home near Washington Square Park, receiving grants from the city and state under the World Trade Center Job Creation & Retention Program to do so. It accounted for about a third of the space and a third of the total rent roll following expansions in 2016 and 2018.
The second largest tenant is Success Academy Charter School, which operates 47 schools serving 20,000 students in the five boroughs, making it the largest free network of its kind in the city. The third largest tenant is AFS-USA, an international youth exchange organization. Both Success Academy and AFS-USA receive rent credits of about $4.5 per square foot per year due to their nonprofit status.
As of October, rent collections at the property stood at 97 percent. Four tenants representing about 10 percent of underwritten base rent had made requests for rent modifications or deferrals as a result of the pandemic.
Silverstein has owned 120 Wall Street since 1980, and has spent $11 million on capital improvements since 2012.
That same year, the landlord entered into a sale-leaseback arrangement with Empire State Development, under which Silverstein makes annual payments in lieu of real estate taxes and passes on certain tax benefits to its not-for-profit tenants. Twelve such tenants, representing 33 percent of the rent roll, currently participate in the program, with expected tax savings totaling $1.6 million last year.
When the ground lease expires at the end of 2032, Silverstein has the right to buy back its fee interest in the property for one dollar.