A joint venture between Sage Realty and Principal Real Estate Investors has landed a $127.5 million debt package to refinance a 52-year-old office tower in Lower Manhattan, Commercial Observer can first report.
Acore Capital provided the 60-month, floating-rate loan for the sponsorship’s 77 Water Street. Sage is the leasing and management arm of William Kaufman Organization, a longtime landlord for the 1970-built property.
Eastdil Secured’s Grant Frankel, Ethan Pond and Tanner McNeill arranged the transaction.
“We are excited for the opportunity to work with tremendous sponsorship in Sage and Principal whose respective track records speak for themselves,” Eric Ramirez, managing director at Acore, said in a statement. “The combination of Sage’s multigenerational ownership and Principal’s institutional expertise made this deal an attractive opportunity for us and we are confident in their vision for the future of this asset and their ability to navigate an evolving market.”
The 26-story 77 Water Street is around 70 percent occupied, with engineering company Arup and law firm Lewis Brisbois Bisgaard & Smith as anchor tenants leasing more than 100,000 square feet each. The 614,000 square-foot office tower features an open plaza with honey locust trees, streams, foot bridges and a wood-framed, turn-of-the-century-style candy store. It also features a sculptured steel replica of a World War I Sopwith Camel fighter plane.
Jonathan Iger, CEO at Sage Realty, said proceeds from the refinancing will be used to redesign the property’s plaza, arcade and lobby. Sage is also teaming up with landscape architect MPFP to design and renovate the ground-floor level’s interior and exterior.
“The building attracts a phenomenal tenancy and I think it goes back to the bones of the building, which is tremendous for the early 1970s, and it is just time to just put a new suit and dress on it,” Iger said. “We really almost see it as a responsibility to create an inviting space, and that’s what we’ve directed our landscape architects to achieve.”
Iger said the environment for achieving loans amid the current market volatility is “disconcerting” and “very difficult,” which underscores the importance of having a strong business plan to offset the inability to be aggressive in rent growth. Obtaining loans is particularly challenging for office properties given uncertainty about hybrid work trends, but Iger said he expects 77 Water Street to be well positioned to attract diverse tenants from across the financial services sector, including tech companies, given the property’s location.
“It really has become a true 24/7, 365 [day] area, and I think we’re really starting to see that even more with the proliferation of entertainment offerings and retail down there,” said Iger, who noted a new pickleball facility recently was inked at nearby 28 Liberty Street. “I think those are some of the key components in attracting tech companies.”
Andrew Coen can be reached at firstname.lastname@example.org.