There are some big changes in store for Pacific Oak Capital Advisors and the Savanna Real Estate Fund at 110 William Street.
An undisclosed city agency agreed to lease 640,000 square feet at the Lower Manhattan building, according to a May Securities and Exchange Commission filing first reported by Bisnow. The 20-year deal accounts for more than two-thirds of the entire footprint of the 32-story, 930,000-square-foot building.
The tenant news comes as the owners reached an agreement with Invesco Real Estate to restructure more than $334 million in debt.
Under the deal, Savanna will transfer its 40 percent ownership stake to Pacific Oak, making the latter the sole owner of the building. Pacific Oak would then invest between $110 million and $130 million of equity for tenant improvements.
An existing $85.7 million mezzanine debt would be converted into preferred equity. The restructured loan is the existing senior loan balance; Pacific Oak could potentially withdraw $56.7 million for future building work.
Pacific Oak and Savanna initially defaulted at 110 William Street in June 2022. The landlords have since received several three-month extensions from Invesco. Outside of the unnamed city agency, only two leases have been signed at the building since 2020, both short-term deals.
A representative for Pacific Oak declined Bisnow’s request for comment. A representative for Savanna didn’t immediately respond to request for comment.
The unnamed agency’s lease is at a starting asking rent of $44 per square foot and is expected to arrive in a staggered manner. The rent is slated to rise $4 per square foot each year, according to Tel Aviv Stock Exchange documents, meaning the landlords would pull roughly $28 million per year once the space is fully occupied.
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City agencies are one of the reasons Pacific Oak and Savanna were in a desperate place to begin with. The New York City Economic Development Corporation in 2016 abandoned 220,000 square feet to move to One Liberty Plaza and the New York City Housing Development Corporation last year vacated space for a relocation to 120 Broadway.
— Holden Walter-Warner