The Stahl Organization has closed its $750 million refinancing of its trophy office tower at 277 Park Avenue, but not without a considerable cost.
A subsidiary of Deutsche Bank lent the nine-figure sum to the Midtown Manhattan landlord, according to an agreement that posted in public records on Monday. The previous mortgage was due to expire two weeks ago.
The pending agreement was reported by Crain’s early last month. The Stahl Organization could not immediately be reached by The Real Deal for comment.
A refinancing of a Manhattan office property in this high-interest, remote-work environment can be a pivotal victory for a landlord, but the reality for Stahl is far more sobering. It needed to kick in $250 million for building improvements to secure the latest loan, revealing a disparity between how the building was valued before and how lenders see it now.
The landlord had even pumped $120 million into recent renovations that included new lobbies. That adds up to $370 million spent in recent years for Stahl to secure the new financing, a gamble for the landlord.
The interest rates Stahl is being saddled with also look bleak compared to the last time the landlord turned to its lenders. The previous mortgage on the property carried a 3.6 percent rate, but when Crain’s reported the new financing agreement last month, the expectation was that the rate would be closer to 7 percent.
Stahl has owned the 1.8-million-square-foot, 51-story property for more than six decades. The property is 97 percent leased, according to Fitch Ratings, 10 percentage points higher than it was a year earlier.
M&T Bank is one of the property’s most high-profile new tenants, having agreed to take 93,000 square feet two years ago. The bank is paying $83 per square foot. Other major tenants include JPMorgan and Visa, the latter of which is paying $107 per square foot for a space near the top of the building.
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