Lending Consortium Refinances SL Green’s News Building With $510M Loan
By Mack Burke June 23, 2020 5:30 pmreprints
After having announced last October that it had sold The News Building in Midtown and then subsequently seeing that $815 million sale fall through, SL Green (SLG) Realty Corp. announced today that it has refinanced the asset with a $510 million mortgage.
Aareal Capital Corp. — a New York-based subsidiary of German financier Aareal Bank (ARL) — Citi and French lender Credit Agricole teamed up to provide the debt financing, according to information from SL Green. The firm said the liquidity generated by this transaction also allowed it to “repay the company’s unsecured revolving credit facility.”
SL Green president Andrew Mathias said in a prepared statement that he credits the closing of the transaction at this time as a “testament” to the firm’s track record and its history and relationship with the lending community, adding that the deal “is another example of the significant liquidity in the [New York City] market.”
The 1-million-square-foot skyscraper at 220 East 42nd Street — between Second and Third Avenues — was built in 1930 and is called The News Building due to its history as the former headquarters for The New York Daily News, which now operates out of offices in the Financial District.
SL Green had announced a $815 million sale — $715 per square foot — of the 37-story art deco office tower to Jacob Chetrit in October last year, with an expected closing date aimed at the first quarter of this year. Chetrit eventually pulled out of the deal in March, amid the height of the COVID-19 pandemic, after its lender Deutsche Bank (DB) decided that it wouldn’t move forward in funding the transaction. Afterwards, SL Green sued Chetrit in an attempt to retain the $35 million contract deposit he had made, according to a March report from Connect New York.
Nevertheless, the building remains in a strong position and is nearly fully leased out to around 60 tenants, as per data from CoStar Group. And this month, SL Green was able to sell two commercial condominiums for $26.7 million to the Young Adult Institute, The Real Deal reported.
Current tenants include local TV station WPIX, the United Nations, Visiting Nurse Service of New York, which has leased more than 308,000 square feet, and Omnicom Group, which is currently housed in around 231,000 square feet, as per data from CoStar.
SL Green bought the asset for $265 million in Feb. 2003, almost two years after it had made a $53.5 million preferred equity investment in the fall 2001. After its purchase, the firm underwent a multi-year “repositioning and retenanting” of the property, as per previous information released by SL Green.
Two of the three banks in the deal are foreign, a trend also seen in Brookfield (BN) Properties and Douglas Development’s $500 million refinance of 655 New York Avenue in Washington, D.C. last week, as CO previously reported. In that deal, the entire lending consortium consisted of foreign financiers.
With additional reporting from Cathy Cunningham.