BXP's 343 Madison Lands $1.2B Loan, Nears Deal With Equity Partner
BXP has nearly pieced together all the money it needs for a new 930K SF office tower in Midtown Manhattan after closing on a $1.2B construction loan.
The financing for 343 Madison Ave. was led by Wells Fargo, alongside Bank of America, Bank of New York Mellon Corp. and JPMorgan Chase, the developer announced Tuesday. The four-year loan is expected to fund 60% of development costs, and the developer is working to lock down partners to fill out the project's financing.
BXP has secured a letter of intent with an equity partner for an $80M investment, representing a 10% interest in the project, CEO Owen Thomas informed investors during the REIT’s second-quarter conference call on Wednesday. The investment is expected to close this quarter and would round out the development’s $2B capitalization.
“And we continue to talk to additional investors about selling additional interest in the property, bringing us up to around that 30% to 50% level,” Thomas said. “We're selling down interest in this property, which we consider to be one of the best office developments in the United States.”
The loan has an initial interest margin of 2.5% over the secured overnight financing rate, which could drop by 25 basis points, depending on certain leasing and construction milestones. The agreement also includes a one-year extension option.
Norges Bank Investment Management had been on board as a partner in the project since 2017 but unexpectedly backed out last year, sending the developer on a hunt for equity. Despite the exit, BXP — formerly known as Boston Properties — began vertical construction on the 46-story tower last year due to requirements under its ground lease with the Metropolitan Transportation Authority.
BXP expects to benefit from the scarcity of large blocks of prime office space in Manhattan. In the second quarter, Midtown’s section of Madison Avenue had a vacancy rate of 11.5%, below the city’s broader rate of 13%, according to Colliers. For Manhattan buildings constructed after 2000, availability was just 6.8%.
Investment and insurance company Starr is set to anchor 343 Madison, initially signing a 275K SF deal in January. The tenant has since expanded its footprint by two floors, Thomas said.
Law firm McDermott Will & Schulte also inked a lease for nearly 150K SF this quarter, bringing the building to 50% preleased. BXP is in negotiations with several other tenants, which could push occupancy up to 70%, Thomas told investors.
“Though we have received single-floor inquiries for the seven floors remaining at the top of the building, we expect continued rent appreciation and will likely lease these floors closer to delivery, given their ability to command market-leading rents,” Thomas said.
The top floors are expected to rent for $350 per SF, which would set a U.S. record for office leases, Crain's New York Business reported.
Among 343 Madison’s main features is its connection to Grand Central Terminal’s Madison Concourse. Under the MTA agreement, BXP will construct a new escalator from the train station to the lobby of the office tower.
Thomas said the firm’s development pipeline comprises seven office and residential projects, totaling 3.5M SF and $3.2B of investment. Of those underway, 343 Madison is the largest, scheduled for completion in late 2029.
“New construction for office has virtually halted already, leading to higher occupancy and rent growth in most submarkets where BXP operates,” Thomas said. “Debt capital is readily available for premier workplaces at attractive credit spreads.”
Overall, BXP reported funds from operations — a key cash flow metric used for evaluating REITs — of $283.4M for the second quarter, compared to FFO of $271.7M during the same period of 2025.
The results beat Wall Street’s expectations, sending its stock price up approximately 6% by Wednesday afternoon.
Like most other REITs, BXP saw its stock spiral around March due to broader macroeconomic pressures, including escalating tensions in Iran, but it has since recovered. Year-to-date, BXP is up over 9%.
