Finance  ·  CMBS

225-233 Park Avenue South Latest NYC Loan to Hit CMBS Market

Following 330 Madison Avenue and the GM Building, it's in good company..

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Orda Management Corp’s loan on 225233 Park Avenue South is the latest to hit the CMBS market. According to a presale report from Kroll Bond Rating Agency today, $70 million of the property’s $235 million senior mortgage will be securitized in the Wells Fargo-sponsored WFCM 2017-C39 conduit. An additional $45 million was securitized in the issuer’s WFCM 2017-C38 conduit earlier this month, and $120 million will be securitized in future deals.

The $70 million loan is the largest in the transaction, accounting for 6.2 percent of the deal. It is secured by a 675,756-square foot Class-A office property comprising two interconnected buildings, located in the Gramercy Park district of Manhattan; 225 Park Avenue South is a 19-story, 503,104-square-foot building that was built in 1910, and 233 Park Avenue South is a 13-story, 172,652 square foot property that was completed in 1909. Orda Management has owned both buildings since 1954 and recently invested $81.9 million in capital improvements, including a lobby renovation and new outdoor spaces, according to the KBRA  report. The property is currently 97.9 percent leased to 10 tenants, the largest of which are Facebook, Buzzfeed and STV.

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Barclays Bank provided a $235 million senior loan and $195 million mezzanine loan on the property in early June, as first reported by The Wall Street Journal.  The financing package was used to refinance $226.4 million of existing debt that was provided by New York State Teachers’ Retirement System, and also to fund reserves, pay closing costs, and return approximately $159.4 million of equity to the sponsor. Jordan Roeschlaub, co-head of Newmark (NMRK) Knight Frank‘s debt & structured finance group, brokered the debt. 

Including the $70 million loan on 225-233 Park Avenue, Barclays contributed 11 loans in total to the WFCM 2017-C39 securitization, or 26.6 percent of the pool. Of those loans, eight were refinances, two were acquisition loans and one was a recapitalization loan.

The property is the latest of many New York City properties to appear in CMBS transactions. As first reported by Commercial Observer, the $500 million loan on Vornado Realty Trust’s 330 Madison Avenue was securitized earlier this month in Wells Fargo’s privately placed MAD Mortgage Trust 2017-330M deal, and Morgan Stanley’s single-asset, single-borrower BXP Trust 2017-GM deal is collateralized by a $1.55 billion portion of the $2.3 billion loan on Boston PropertiesGeneral Motors Building at 767 Fifth Avenue.

Seems like CMBS is not-too-shabby a financing option at the moment…