SL Green announced this morning that Metro-North has signed a 266k SF renewal and expansion in the Graybar Building, but the investor is doing something interesting on the debt side, too. It and Blackstone have loaned RXR and Walton Street Capital $165M in mezz debt ($125M now and the rest as needed) for the renovation and lease-up of the 1.2M SF 237 Park that's already under way. JLL's Kelly Gaines (in blue, dirt bike riding at 12,656 feet at Cinnamon Pass in Colorado with Lizard Rock in the background), who repped the borrowers with colleague Dustin Stolly, told us Friday that operators are getting into the bridge/mezz game more frequently as a way to place capital in a competitive investment market.
SL Green and Blackstone could have bought into a Midtown office building at a 4% cap. Instead, they've lent at 7%, putting their money to work with a strong sponsor, Kelly says. And should they come to own 237 Park (above) at $470/SF on the loan, well, that's a good proposition for an asset of this quality and location. He adds that more traditional lenders fell out of the competition when they couldn't provide the flexibility RXR and Walton wanted in determining exactly how to spend the money. And at 7%, RXR and Walton also get well-priced money for a building that's only 80% occupied with rollover coming in the near future.
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