Paramount Group Lends $415M on 575 Lex
By Matt Grossman June 26, 2018 5:37 pm
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The troika of owners in control of 575 Lexington Avenue have secured a massive $415 million refinancing on the building from a debt fund raised by Paramount Group, Commercial Observer has learned.
A Cushman & Wakefield team led by Steve Kohn negotiated the debt on behalf of the three owners: Angelo Gordon & Co., Normandy Real Estate Partners and George Comfort & Sons. Adam Spies of C&W’s capital markets team also contributed to arranging the financing. The loan represents about 53 percent of the closing value of its parent debt fund, Paramount Fund VIII, which closed out at $775 million in May 2016.
The floating-rate financing refreshes debt from a Wells Fargo (WFC) balance-sheet loan dating from the owners’ 2015 purchase of the tower for $510 million.
The fund, Paramount’s second debt-investment initiative and the largest fund in the company’s history, was created to invest in mezzanine and preferred equity investments in New York City, Washington, D.C. and San Francisco, according to an announcement about its closing. The fund had previously invested at least $165 million in those three cities, it said.
The 744,000-square-foot tower serving as collateral for the new loan stands 35 stories tall on the east side of Lexington Avenue between 51st and 52nd Streets. Built in 1950, the building was renovated in 1990, according to CoStar (CSGP) Group, and the owners are in the midst of spending more than $50 million on completed and ongoing projects to upgrade its lobby, elevators and mechanical systems.
Weill Cornell Medical College leases more than 156,000 square feet on five stories in the building, and high-profile litigators Boies, Schiller & Flexner which is on three floors of their own. Street-level retailers include a Duane Reade drugstore, a Maison Kayser bakery and a gym run by New York Sports Clubs.
In all, the Midtown East building, which is managed by Normandy, is 86 percent occupied.
“The traditional financing market continues to improve to high-quality assets and sponsors,” Kohn, president of C&W’s equity, debt and structured finance group, said in a statement.
Alex Hernandez, Dave Karson and Gideon Gil supported Kohn in brokering the deal for C&W.
Representatives for Normandy, Angelo Gordon and George Comfort & Sons did not immediately respond to inquiries.
