Vornado, CPPIB Wrap $525M CMBS Refinance of One Park Avenue
By Cathy Cunningham March 2, 2021 10:00 am
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Vornado Realty Trust (VNO) and Canada Pension Plan Investment Board (CPPIB) have officially closed the $525 million CMBS refinance for their office tower at One Park Avenue, sources told Commercial Observer today.
The transaction marks one of the largest office refinances to close post-COVID.
The financing closed on Friday, and the CMBS loan will now be securitized in the ONE 2021-PARK single-asset, single-borrower transaction. The bonds priced on Feb. 10.
The two-year, interest-only, floating-rate mortgage loan, provided by Deutsche Bank (DB) as left lead and Barclays (BCS) as right, matures on March 9, 2023, and includes three one-year extension options.
The loan has moderate leverage, per a S&P Global Ratings pre-sale report. The loan-to-value ratio, based on the appraiser’s valuation, is 60 percent. Loan proceeds returned approximately $194.7 million of equity to sponsorship.
CO reported Deutsche Bank and Barclays were lined up to provide the refinance in early February. CBRE (CBRE)’s James Millon, Tom Traynor and P.J. Finley negotiated the financing, per an offering memorandum reviewed by CO at the time.
The 943,302-square-foot office building was erected in 1926 by developer Henry Mandel and designed by York & Sawyer.
Anchor tenant New York University renewed its lease at the property for the NYU Langone Medical Center at One Park Avenue late last year. NYU has been a tenant at the building since 1999 and has expanded its space 10 times, from approximately 83,000 square feet to its current lease for 632,628 square feet today.
The property benefits from a 30-year tax abatement, which expires at the end of NYU’s lease in 2050.
Per the S&P pre-sale report, of Feb. 2, 2021, the property was 97.7 percent leased to eight office and six retail tenants. While NYU occupies the majority of its office component, Citibank, Equinox and Zibetto Espresso Bar lease its retail space. Equinox and Zibetto requested rent relief during COVID, and Equinox is currently in negotiations with the landlords for further relief, according to the report.
CPPIB owns a 45 percent stake in the asset. It held an 11 percent indirect interest — via a Vornado fund it invested in — up until 2014, before investing additional capital to increase its ownership interest.
Since 2014, Vornado and CPPIB have invested more than $64.2 million, or $68 per square foot, in various capital projects, including lobby upgrades, roof replacements, elevator modernization, and tenant build-outs, per the S&P report.
