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SL Green secured a $500M refinancing loan for its 919 Third Ave. office tower, despite concerns over the company’s near future as it faces declining profits in anticipation of long-term hybrid work trends.
The 47-story Midtown East tower nabbed the loan from an international group led by Credit Agricole and Aareal Bank, SL Green announced Wednesday. Bank ABC, MetLife and PacLife are among the other lenders involved, Commercial Observer reports.
The loan has an interest rate of 250 basis points over the term secured overnight financing rate, an agreement structured in anticipation of further federal interest rate hikes, which lenders have swapped to a fixed rate of 6.11%. The loan comes with two one-year extension options.
“We are pleased to have secured this refinancing for 919 Third Avenue, which reaffirms the liquidity in the market for high quality assets with high quality sponsors,” SL Green Chief Investment Officer Harrison Sitomer said in a statement. “The deep relationships we have with financial institutions around the world coupled with the caliber of our portfolio and operating platform give us confidence in our ability to continue to execute in the capital markets, notwithstanding current credit market conditions."
The deal for the 1.5M SF office tower was brokered by CBRE’s James Millon, Tom Traynor and Mark Finan, according to the release, while Commercial Observer reports the loan was sourced by CBRE’s Darcy Stacom and Bill Shanahan.
SL Green scored the refinancing deal amid concerns from its Q1 earnings report last week that the firm will face continued challenges in New York City's office market. CEO Marc Holliday described the climate as “another moment of significant change as businesses rethink their office needs” during an earnings call.
The Third Avenue property was completed in 1970, with architecture firm Skidmore, Owings & Merrill working to accommodate an existing landmark, restaurant P.J. Clarke’s, into the steel and glass design. Its tenant roster includes law firms Schulte Roth & Zabel LLP and Mintz, Levin, Cohn, Ferris, Glovsky, and Popeo, as well as Bloomberg LP. The property is approximately 80% leased, according to the release.
The Midtown East office property may be an exception on Third Avenue, which has been a cause for concern among experts on Manhattan’s office sector recently. The combination of the location — less easily reached by public transit than offices closer to Times Square or Hudson Yards — alongside the area’s aging office stock mean the odds are less than favorable for most Third Avenue office properties, industry experts say.
“We definitely have our eyes on some older products in the Financial District or older product on Third Avenue,” JLL New York City Vice Chairman Cynthia Wasserberger told Bisnow last month. “Some of the more theoretically inferior locations might suffer more than the better buildings that just happen to be faced with a tenant vacancy.”
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