Nearly six months after predicting the threat of remote work is “overstated,” Boston Properties secured a boost in the form of a $1 billion loan for its substantial office building at 601 Lexington Avenue.
The developer secured the refinancing package from Wells Fargo, Deutsche Bank, Morgan Stanley and Citigroup, the Commercial Observer reported. According to Moody’s Investors Service, $426.7 million of the debt will be securitized in a single-asset, single-borrower CMBS deal.
The 10-year, fixed-rate first-lien mortgage is being backed by the fee simple and leasehold interests in the office condominiums and the six-story office and retail atrium within the 59-story building, the Observer reported.
Boston Properties is partnering with Norges Bank Investment Management, which bought a 45 percent interest in the building in 2014 for $1.5 billion, along with interests in two of the company’s buildings in Massachusetts’ capital city.
Boston Properties was faced with the imminent maturation of $620 million in existing mortgage debt before the latest refinancing, as the debt was set to mature in April. Boston Properties CFO Michael LaBelle said in the company’s third quarter earnings call it was the only significant debt maturity coming for 18 months, according to the Observer.
The 1.8 million-square-foot office building was constructed in 1977 and became the youngest landmarked building in the city in 2016. The building has an average occupancy of about 98 percent since 2010 and is 84 percent leased to prominent law firms, including Kirkland & Ellis.
Boston Properties recently completed a $283 million renovation of the building’s atrium that incorporated additional restaurant space, as well as a ground-level entrance and separate lobby at East 53rd Street. The developer has also upgraded other entryways and office space, in addition to opening a 17-restaurant food hall in September.
[CO] — Holden Walter-Warner