$3B refi of One Vanderbilt set to close in two weeks: report

Nine banks set to participate in massive CMBS deal

New York /
Jun.June 09, 2021 06:18 PM
SL Green’s Marc Holliday with One Vanderbilt. (SL Green, KPF Architects)

SL Green’s Marc Holliday with One Vanderbilt. (SL Green, KPF Architects)

One of the biggest single-asset commercial mortgage-backed security loans in history is set to close in a few weeks, according to a new rating report published Wednesday by DBRS Morningstar.

A group of nine banks led by Wells Fargo and Goldman Sachs is putting together a $3 billion refinancing for SL Green, the National Pension Service of Korea and Hines’ One Vanderbilt, with an estimated closing date of June 23, according to the report.

The Real Deal first reported the transaction was in the works in April. According to DBRS, the new financing will pay off $1.395 billion of existing debt and return about $1 billion in equity to SL Green and its partners, although the exact figures are subject to change.

The CMBS mortgage will comprise nine senior A notes, each from a different lender. Wells Fargo is originating half of the total debt, or $1.5 billion, while Goldman Sachs is contributing $600 million. Bank of America, Bank of China, Bank of Montreal, Deutsche Bank and JPMorgan Chase will each lend $150 million, and Barclays and Citi will chip in $75 million each.

According to a May appraisal from Newmark Knight Frank, cited in the DBRS report, the 1.65 million-square-foot office tower next to Grand Central has an as-is value of $4.1 billion and will be worth $5 billion upon stabilization.

DBRS’ own assessment of the property’s value is more conservative, at just $2.97 billion — less than the value of the debt — but its overall review is still glowing.

“In addition to being exceptionally well located, the collateral exhibits asset quality that is relatively unmatched, even among New York’s existing supply of trophy office properties,” the report says.

“The collateral’s clearly superior asset quality and market location are projected to fuel a new ceiling for Midtown Manhattan office rents, a trend clearly supported by the collateral’s active lease-up during the height of the ongoing coronavirus pandemic.”

Top tenants at One Vanderbilt include TD Bank, Carlyle Investment Management, McDermott Will & Emery, TD Securities, and Greenberg Traurig.

While rents for individual tenants are not disclosed, the property’s net operating income is expected to be more than $200 million a year, according to the loan issuer. This includes $24 million a year in base rent from the observation deck, which is expected to open in October.

Daniel Boulud’s fine dining restaurant at the property, Le Pavillon, recently opened and is booked through September, according to the report.

With a weighted average remaining lease term of 17 years, hardly any tenant turnover is expected over the life of the ten-year loan. On Monday, SL Green announced three more leases that brought the property’s occupancy to 89 percent.

Thanks to the low interest rate environment and a pullback from other kinds of lenders, the CMBS market has emerged as a major source of trophy property refinancings in recent months.

But few single-asset/single-borrower CMBS transactions have ever hit the $3 billion mark. The largest SASB CMBS deal in the past cycle, the $5.6 billion BX 2019-XL, covered a 65 million-square-foot portfolio of hundreds of industrial properties across the country.





    Related Articles

    arrow_forward_ios
    The Daily News Building at 220 East 42nd Street and SL Green CEO Marc Holliday (Credit: Getty Images)
    SL Green puts Daily News building up for sale
    SL Green puts Daily News building up for sale
    SL Green snags private-equity firm at One Vanderbilt
    SL Green snags private-equity firm at One Vanderbilt
    SL Green snags private-equity firm at One Vanderbilt
    SL Green’s locks in big bank lease at Hudson Yards redevelopment site
    SL Green’s locks in big bank lease at
    Hudson Yards redevelopment site
    SL Green’s locks in big bank lease at
    Hudson Yards redevelopment site
    The SASB market has produced several massive transactions, like a $4.65 billion loan for the Extended Stay America portfolio or SL Green Realty’s $3 billion refinancing of One Vanderbilt office tower in Manhattan (iStock, KPF, Getty)
    CMBS loan issuance is booming — but not in the usual areas
    CMBS loan issuance is booming — but not in the usual areas
    SL Green CEO Marc Holliday (Getty, SL Green)
    “The ink on the leases” shows tenants still want office space: SL Green CEO
    “The ink on the leases” shows tenants still want office space: SL Green CEO
    SL Green CEO Marc Holliday and One Vanderbilt (Getty)
    SL Green asking record $322 psf at One Vanderbilt
    SL Green asking record $322 psf at One Vanderbilt
    SL Green CEO Marc Holliday with 461 Fifth Avenue and 220 East 197th Street in Fordham (SL Green, Google Maps)
    SL Green pays $28M for full control of Midtown office building
    SL Green pays $28M for full control of Midtown office building
    Employees revolt against return-to-office edicts
    Employees revolt against return-to-office edicts
    Employees revolt against return-to-office edicts
    arrow_forward_ios

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

    Loading...