Savanna Closes on 1375 Broadway Buy with $389M Financing Package
By Mack Burke and Cathy Cunningham July 14, 2020 4:57 pmreprints
Savanna closed on its purchase of 1375 Broadway last week and landed a $388.5 million financing package in the process, multiple sources told Commercial Observer.
The deal — one of the very few large New York City office property acquisitions to reach the finish line during the COVID-19 pandemic — closed on July 10, with Savanna paying $435 million for the 27-story office asset, sources confirmed.
Brookfield Real Estate Finance originated the senior/mezzanine debt portion of the financing, syndicating the $200 million senior portion to Deutsche Pfandbriefbank and Aareal Capital Corp. and retaining the $103.5 million mezzanine position. Declaration Partners — an investment firm affiliated with the family office of David Rubenstein, the co-founder of Carlyle Group — took a roughly $85 million preferred equity position in the deal.
“We’re thrilled to close on the acquisition of 1375 Broadway and to have assembled a strong consortium of lenders and partners who share Savanna’s conviction in the quality of the asset and the potential to build value through and beyond the COVID crisis,” Cooper Kramer, a managing director at Savanna, said. “We appreciate the hard work on the part of all parties involved in the transaction. This is a terrific asset in an outstanding location, positioned to perform well in the face of any challenging market condition, and we are excited to own it and take it to the next level through our planned improvements.”
Cushman & Wakefield’s Adam Spies, Doug Harmon, Josh King, Adam Doneger, Kevin Donner and Marcella Fasulo led the sale of the property, while C&W’s Spies, Steve Kohn, Alex Hernandez, Alex Lapidus and Zachary Kraft negotiated the financing.
In January, Savanna recapitalized its office tower at One Court Square in Long Island City in a $880 million deal, with the same C&W deal team involved in the recap.
Savanna went into contract to buy 1375 Broadway — between 37th and 38th Streets — from Westbrook Partners in February, just prior to the onset of COVID-19, as reported by The Real Deal. Interestingly, Savanna previously owned the property, selling it to Westbrook in 2015 for $310 million. Savanna had first bought the asset in December 2010 for $135 million from Chedward Realty Corporation, according to data from CoStar Group.
Built in 1927 and designed by Ely Jacques Kahn, the nearly 500,000-square-foot office property’s largest tenant is accounting firm Anchin, Block & Anchin, which leases 117,00 square feet across seven floors, per CoStar data. The building is currently fully occupied by a range of other office tenants across a variety of sectors, including communications, manufacturing and utilities.
Hunton Andrews Kurth represented Savanna in the transaction.
Only last month, Deutsche Pfandbriefbank provided a $150 million refinance for Aurora Capital Associates and William Gottlieb Real Estate’s office and retail property in the Meatpacking District. And, in what’s become a trend during the COVID-19 pandemic, foreign lenders have stepped up to fill out loan syndicates. Aareal and Crédit Agricole joined Citigroup in the $510 million refinance of SL Green Realty Corp.’s News Building, while a consortium of foreign banks —namely, Crédit Agricole, Standard Chartered, Helaba and BayernLB — refinanced Brookfield Properties and Douglas Development’s 655 New York Avenue in Washington, D.C.
Officials at Deutsche Pfandbriefbank, Aareal Bank and Declaration Partners couldn’t immediately be reached for comment. Brookfield and C&W officials declined to comment.