PBC nears $385M loan for HSBC tower after sale to Innovo collapses

PBC will keep $35M deposit from Innovo, which had struggled to secure financing for the deal

Eli Elefant and 452 5th Avenue (IAVA, Property Building Corp)
Eli Elefant and 452 5th Avenue (IAVA, Property Building Corp)

Property and Building Corporation is close to landing a $385 million refinancing for its HSBC tower in Midtown after Innovo Property Group’s bid to purchase the building collapsed.

JPMorgan plans to provide the loan at a rate of 3.9 percent, according to a source familiar with the deal and filings on the Tel Aviv Stock Exchange. It will replace an existing $380 million loan.

PBC also plans to renovate and modernize the building at 452 Fifth Avenue instead of selling it, the source said. PBC will keep Innovo’s $35 million deposit.

The $855 million sale to Andrew Chung’s Innovo fell apart after HSBC’s recent announcement that it would leave the Fifth Avenue building and move to Hudson Yards. Rising interest rates could also have been a factor.

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Innovo was also unable to close on financing for the acquisition. Chung’s firm was shopping around for different sources of financing for months, according to sources. Innovo ultimately missed its May 16 deadline to close on the deal.

PBC, led by Eli Elefant , bought the 30-story tower at 452 Fifth Avenue for $330 million, or $381 per square foot, in 2010 from HSBC, as the bank was selling off its office properties in the wake of the financial crisis.

PBC put $2 billion in U.S. real estate assets on the market in December while its parent company seeks to reinvest in Israel.

The company, an affiliate of Israeli holding company Discount Invest­ment, tapped Eastdil Secured’s Roy March and Gary Phillips to market the Midtown property. The building was expected to go for around $850 million, or $982 per square foot.