Argentic Supplies $32M CMBS Refinance on Brooklyn Mixed-Use Asset
By Andrew Coen September 27, 2021 11:42 am
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Sutton Management has sealed a $32 million commercial mortgage-backed securities (CMBS) debt package from Argentic Real Estate Finance for the refinance of a mixed-use Downtown Brooklyn property, according to a ratings agency analysis of the deal.
The interest-only loan for 384-390 Fulton Street features a five-year term at a 3.92 percent rate, according to Fitch Ratings’ analysis of the conduit CMBS transaction released late last week. The deal is slated to close on Oct. 6.
Argentic’s underwritten loan-to-value ratio of 62.9 percent indicated that the lender values the 475,000-square-foot property at $50.9 million, Fitch data shows.
Loan proceeds will be used to refinance $21.1 million of existing debt, finance defeasance costs, and fund immediate repairs and upfront reserves. The loan will also return $9.9 million of equity to the sponsor and pay closing costs.
The property, which has been owned by Sutton Management for 40 years, is 100 percent occupied by pharmacy chain Duane Reade, nonprofit group NADAP and The Hope Program, a job placement company. Duane Reade, which has been at the property since 1987, is in the midst of a long-term lease that expires Aug. 31, 2031, with a 10-year renewal option.
The NADP and Hope Program leases are scheduled to expire in January 2025 and October 2024, respectively, which Fitch cautioned could lead to challenges for the property, since the two entities comprise 61.9 percent of its net rentable area. Neither company has renewal options remaining.
The building was originally constructed in 1925 and renovated in 2014.
New York-based Sutton Management Corp. has a portfolio of 15 office, retail and multifamily properties totaling 475,000 square feet. The company was founded in 1980 by Sam Sutton and Abe Sutton.
Andrew Coen can be reached at acoen@commercialobserver.com.
