Wells, Morgan Stanley to provide Paramount’s $860M refi at 1301 Sixth Avenue

Interest-only loan at 71% leased building retires $850M in maturing debt

1301 Sixth Avenue and Paramount Group's Albert Behler (Google Maps, Getty)
1301 Sixth Avenue and Paramount Group's Albert Behler (Google Maps, Getty)

Paramount Group has reeled in its big refi.

An $860 million package — one of the largest since the pandemic — at 1301 Sixth Avenue will be provided by Wells Fargo and Morgan Stanley, the Commercial Observer reported.

Tenants occupy just 71 percent of the office building’s 1.7 million square feet, although low interest rates have helped borrowers restructure debt rather than sell at distressed prices.

Paramount’s $850 million of debt on the building was set to mature in November. The refinancing replaces that.

Wells Fargo and Morgan Stanley will each provide a $355 million mortgage loan and a $75 million mezzanine loan. The interest-only package includes a $500 million tranche with a fixed 3.11 percent interest rate and a $360 million tranche with a floating rate of Libor plus 2.65 percent, the publication reported. The term of the loan is five years.

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Paramount posted a second-quarter loss of $16 million as the pandemic has stunted demand for its office space. For more than a year, the office REIT has marketed 500,000 square feet at 1301 Sixth Avenue that was once leased by Barclay’s, but has yet to land a tenant.

Remote work during the pandemic has thrown employers’ office needs into doubt. Companies including Apple and Google recently postponed calling employees back in light of the rise of the Delta variant.

Paramount nonetheless trumped the deal, announced previously during the company’s first-quarter-earnings call.

“This transaction is a strong endorsement of the strength of the New York City office market and a testament to the confidence the capital markets have in our platform,” said Wilbur Paes chief operating officer, chief financial officer, and treasurer of Paramount.

[CO] — Orion Jones