SL Green Finances Park Avenue Tower With $480M Loan

SL Green grabbed financing for its acquisition of Park Avenue Tower, but not without putting down a significant amount of money itself.

The office landlord scored a $480 million mortgage to finance the $730 million purchase of 65 East 55th Street in the Plaza District, Crain’s reported. Wells Fargo, JPMorgan Chase and Bank of America are providing the debt, according to Commercial Real Estate Direct.

Marc Holliday’s firm is expected to make a $270 million down payment to secure the loan, equivalent to about 36 percent of acquisition’s total financing. The figure represents a significant increase on the down payment Blackstone put down when it acquired the building a decade ago.

The five-year loan is expected to close next week, according to a report from S&P Global.

The 600,000-square-foot building, which is 97 percent occupied, is filled with financial firms and hedge funds as tenants. The building’s largest tenant is PineBridge Investments, occupying about 75,000 square feet; other major tenants include BTIG, Raine Group and a division of Creative Artists Agency. The seller previously spent $180 million renovating the property.

SL Green will need to convince some tenants to stay, as about a third could leave early with a termination fee, according to S&P. The average gross rents are well below market rates, however, meaning tenants won’t have significant incentive to abandon ship.

Holliday has shot out of the starting gate this year. This week alone, his firm sold a minority stake in the 100 Park Avenue office building to Rockpoint at a valuation of $425 million. That followed SL Green’s prior purchase of a 49 percent stake from its partner Prudential for a $360 million valuation.

At its investor conference last month, SL Green said it plans to sell $2.5 billion worth of property, in part to help offset higher interest rates.

The real estate investment trust is “selling assets [and] losing [income] to fight against interest rates that are too high,” Chief Financial Officer Matthew DiLiberto said at the conference.

The firm also intends to be busy on the buy side with roughly $1 billion worth of acquisitions planned for this year.

— Holden Walter-Warner