Himmel + Meringoff Recaps 525 West 57th Street With $93M Loan from Delaware Life

Himmel + Meringoff Properties just completed a significant recapitalization of its mixed-use building at 525 West 57th Street, Commercial Observer can first report 

Life insurance company Delaware Life provided a $93 million first mortgage in the deal, while Himmel + Meringoff co-Managing Partners Leslie Himmel and Stephen Meringoff infused additional equity. 

The new capital will be used to complete construction of 50,000 square feet of medical space for Mount Sinai West hospital’s neurological and dermatology departments, and for future leasing of the 63,000 square feet of vacant space at the building.   

Newmark’s Joshua King, Adam Spies and Christopher Kramer negotiated the recap. 

Other major tenants at the 300,000-square-foot building — which includes office, medical and laboratory space — include the City of New York, the International Multiple Sclerosis Management Practice and the Tisch Multiple Sclerosis Research Center of New York.

The transaction’s significance goes beyond the size of the recapitalization and is a harbinger of continued positive momentum in New York City’s office market, Meringoff said.

“This is a very important moment for New York City office buildings, and I think what’s significant about it is that things are finally moving,” Meringoff said. “Blackstone [is in talks to] invest in a major office building at 1345 Sixth Avenue and there are lenders who are willing to now at least consider the highest-quality office loans as a sector that they can now bring before their committee and say, ‘Hey, I got an office loan in New York’ and not be thrown out of the room.

“I believe that the big freeze is thawing in terms of money being available to recapitalize office buildings,” Meringoff added.

The building’s tenants have a weighted average lease term of 20 years. That, coupled with the building’s varied tenancy and uses, put it in good stead to weather dramamine-worthy market volatility the past few years and secure the capital needed for its next chapter.

Along with battling hairy market conditions, ownership faced an additional hurdle in the fact that 525 West 57th Street’s previous lender was Signature Bank. 

The building’s $105 million loan was one of Signature’s largest loans in New York City, originated by the now-defunct bank in 2017. When Signature failed in March 2023, there was no lender counterpart for the borrower to work with on its maturing loan. Still, while some office buildings struggled to be refinanced and recapitalized, 525 West 57th Street’s ability to cater to lab and medical tenants in addition to office tenants enabled it to perform and lease well throughout the market bumps and attract a brand-new source of capital in Delaware Life. 

“The fact that this building is leased to really high-quality, creditworthy tenants with long lease terms made a big difference to Delaware Life,” Meringoff said. “There was also a significant equity infusion from Leslie and myself in order to complete the work that was halfway done to put Mount Sinai into the building. So, the overall recap amount is much higher.” 

Meringoff declined to disclose the equity amount. 

“We are very close to Mount Sinai West, so the proximity to that hospital was part of the allure for the Mount Sinai dermatology and neurology groups,” Himmel said. “That was part of our success in the leasing of this building, a lot of which we did through COVID.” 

Delaware Life’s participation in the deal reflects a broader trend of strong life company appetite for commercial real estate, with the sector being a great fit for life companies to put their dollars — long-term in nature, due to insurance premiums — to work. 

Further, the insurance and life company business has become increasingly consolidated. As some of these platforms have been acquired by private equity firms, those firms have redirected life companies to do more in real estate — with real estate, in turn, welcoming the relatively cheap cost of capital with open arms. 

Sources said life companies are aggressively seeking New York City asset exposure — another strong sign of the market recovery that is well under way. And, as the market continues to recover, there’s more capital pursuing defensive assets such as 525 West 57th Street and an increased ability for people to rework deals and put their assets on a solid footing. 

Himmel said the difficulty of the past few years reminds her of the 1875 poem by William Ernest Henley, “Invictus.” 

“It talks all about resilience and determination in the face of adversity,” she said. “On March 12, 2023, Signature Bank went under, so for 24 months we just kept going forward, and I’m very proud of us. It’s been a rough ride, and I’m very proud of our team and our company, because no matter what was going on, we just kept going forward and kept our heads down to cross the finish line.”

And, they had the grit required to do just that, in the city they love. 

“Never ever, ever bet against New York,” Meringoff said. “When it comes to the resiliency of all the office markets in the country, this is the one that I would bet on.”

Delaware Life didn’t immediately return requests for comment. Newmark declined to comment. 

Cathy Cunningham can be reached at ccunningham@commercialobserver.com.