$450M refi reveals what tenants pay at Silverstein’s 1177 Sixth Avenue

Valued at $860M, Silverstein and CalSTRS-owned skyscraper is home to law firm Kramer Levin, among others

New York /
Oct.October 25, 2021 08:00 AM
Silverstein Chairman Larry Silverstein, CalSTRS CEO Cassandra Lichnock and 1177 Sixth Aveneut (Silverstien, Getty, CalSTRS)

Silverstein Chairman Larry Silverstein, CalSTRS CEO Cassandra Lichnock and 1177 Sixth Aveneut (Silverstien, Getty, CalSTRS)

The following is a preview of one of the hundreds of data sets that will be available on TRD Pro — the one-stop real estate terminal that provides all the data and market information you need.

Larry Silverstein and a California pension fund landed a major refinancing at 1177 Sixth Avenue months after buying out former partner UBS’s stake in the Midtown office skyscraper.

On Oct. 8, Silverstein Properties and the California State Teachers’ Retirement System retired the tower’s existing mortgage with a $450 million loan led by DBR Investments Co. — a Deutsche Bank affiliate — and Wells Fargo, property records filed Thursday show.

Silverstein and CalSTRS now fully own the building, having bought out UBS’s 49 percent equity stake in June in a deal that valued the property at $860 million. Documents associated with this month’s securitization provide an inside look at the building’s finances.

The Americas Tower has generally managed to stand tall against turbulence in the Manhattan office market, where availability rates set records this summer as asking rents slid to four-year lows.

A number of long-term tenants, some short-term lease extensions and a pair of rent abatements helped assure a minimal impact on the building’s occupancy rate, which dipped from 91 percent in 2019 to 87 percent as of September, according to DBRS Morningstar. The building boasts a seven-year average occupancy rate of 92 percent, with leases for only a quarter of its space expiring during its current loan term.

Nestled between 45th and 46th Streets, the 47-story skyscraper includes 968,772 square feet of office space and just under 5,000 square feet of ground-floor retail occupying the entire blockfront along Sixth Avenue since its construction in 1992.

The building’s largest tenant by far is the headquarters of the law firm Kramer Levin, Naftalis & Frankel. The firm has over 300 attorneys and handled nearly $150 million in residential and commercial real estate deals between Aug. 2020 and Aug. 2021, according to TRD’s annual top 40 ranking.

In 2017, Kramer Levin signed a lease extension for 265,000 square feet that expires in 2035, according to DBRS Morningstar.

Signature Bank holds the second spot with four suites in the building. Signature inked a 16-year lease at for 90,000 square feet at Empire State Realty Trust’s nearby 1400 Broadway in 2018, a potential concern given that the bank has an option to terminate its lease at 1177 Sixth Avenue in 2028. But according to DBRS Morningstar, Signature recently amended its lease at the building, adding nearly 25,000 square feet to its fourth-floor space with no sublease plans.

Other tenants rounding out the ranking are the legal education non-profit Practising Law Institute, financial advisor Andersen Tax, law firm Faegre Drinker Biddle & Reath and Tradeweb Markets, an online financial marketplace operator which spun off from Blackstone in a 2019 IPO.

Out of the 23 tenants, two were granted a rent deferral or abatement during the pandemic.

Regus, a shared office-space operator, was granted a 50 percent reduction in rent for its nearly 34,000 square feet of space from January to September of this year, while ground-floor retail tenant Charles Tyrwhitt had rent deferred from April 2020 to June 2020, according to DBRS Morningstar.





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