RFR Lines Up $1.2B CMBS Loan To Refinance Seagram Building
RFR is close to landing a $1.2B CMBS loan to refinance the debt tied to its trophy office tower on Park Avenue, the Seagram Building.
Proceeds from the four-year, fixed-rate loan, along with $24.6M of existing reserves, would be used to pay off the $1.15B in existing debt tied to the office tower at 375 Park Ave., according to a presale report by KBRA.
An appraisal conducted by Newmark last month pegged the building's value at more than $1.8B. The mortgage is expected to close on Feb. 20 at an interest rate of 6.25%. That would be significantly higher than the existing debt on the tower, which carries a 3.53% interest rate, according to Morningstar Credit.
The new debt's originators are Morgan Stanley, Citi Real Estate Funding and JPMorgan Chase. RFR founders Aby Rosen and Michael Fuchs are listed as the nonrecourse carve-out guarantors.
The previous debt was provided by Citi and German American Capital Corp. and has an outstanding balance of approximately $738M. The remainder of the building's debt is reportedly composed of a mezzanine loan and preferred equity.
The new mortgage would also fund reserves, including a $26M escrow for contractual free rent and $21.3M for outstanding landlord obligations, and pay closing costs. Eastdil Secured is representing RFR in the refinancing.
An RFR spokesperson declined to comment.
The 860K SF, 38-story tower is 96% occupied, according to KBRA. That is in part thanks to alternative asset manager Blue Owl Capital, which increased its space in the building by 42% to 240K SF in October. The asset management firm agreed to pay $220 per SF for its space, according to KBRA.
The new debt resolves one of the largest office loans set to mature this year, a mortgage that had given RFR some headaches since the pandemic.
In April 2023, the loan was transferred to special servicing for imminent monetary default in advance of its original maturity date in May 2023. The loan’s maturity has been extended twice to this May. RFR hasn't been delinquent on the loan in the year leading up to the refinancing, KBRA reported, citing Trepp and its own CMBS surveillance platform.
The Seagram Building is the latest property in RFR's vast portfolio — which has seen its share of struggles — to land new financing. Last month, Rosen and Fuchs' firm announced the refinancing of the office properties at 17 State St. and 150 E. 72nd St., as well as the recapitalization of 670 Sixth Ave.
The refinancing follows on the heels of a series of CMBS megadeals this month. Irvine Co. is expected to close on a $1.5B refinancing for the MetLife Building. Ivanhoé Cambridge and Hines landed more than $1.1B in new CMBS debt for 3 Bryant Park. Fisher Brothers and Alaska Permanent Fund Corp. also closed on a $500M securitized mortgage for 299 Park Ave.
Tishman Speyer landed $2.9B in CMBS debt for The Spiral last month and $3.5B for Rockefeller Center in October, the largest single-asset office CMBS issuance in history.
