SL Green nearing Refi at One Vanderbilt

SL Green Realty is nearing a roughly $2.25 billion debt package led by Goldman Sachs + Wells Fargo to refinance One Vanderbilt. The financing is expected to close in June, and the lenders plan to securitize the debt into a massive single-asset, single-borrower CMBS deal, according to The Real Deal.

Backdrop: SL Green and its partners – National Pension Service of Korea and Hines – opened the 1.7 million-SF office tower in September, and it’s roughly 73% leased.

Tenants: TD Bank (193,159 SF), TD Securities (118,872 SF), Greenberg Traurig (140,000 SF), Carlyle Group (127,744 SF), McDermott Will & Emery (130,000 SF), Oak Hill Advisors (69,802 SF), KPS Capital Partners (28,024 SF), Walker & Dunlop (16,614 SF), Hodges Ward Elliott (12,692 SF), and SL Green itself (70,000 SF).

Worth Noting: The remaining available space is mainly on the upper levels of the 77-story tower. Asking rents range from $125 to $200 per SF. 

Enormous cash-out refi: In 2016, Wells Fargo led a consortium that provided the JV with a $1.5 billion construction loan. As of this past December, the balance on that loan stood at roughly $1.2 billion, which means the partnership could cash out more than $1 billion in proceeds from the transaction, TRD reported. In anticipation of the Refi, the REIT entered into a $2.25 billion, 10-year, fixed-rate forward starting swaps, which should be in excess of the swapped amount. The swaps have a weighted average interest rate of 1.6%.

New standard: All building tenants will have access to a 30,000-SF tenant-only amenity floor with large-format meeting spaces, a club-style lounge, curated food offerings, and an outdoor terrace that faces Grand Central. Office floors yield floor-to-ceiling slab heights ranging from 14.5 feet to 24 feet, column-free floor plates, and 360-degree views through floor-to-ceiling windows.

Why it matters: During a time when many are questioning the future need of office space, the deal reaffirms a strong debt market for high quality office buildings. The Partnership for New York City found in early March that only 10% of Manhattan office employees had returned to the workplace. With office occupancy rates at historic lows, properties like One Vanderbilt will rise to the top. There will be a flight to quality, as tenants demand a new standard of excellence.

A league of its own: Few properties in New York City have landed financing packages of this size. The most recent example is back in 2017 when Boston Properties landed a $2.3 billion loan for the historic General Motors Building. [PR+TRD]

Start your morning with the essential commercial real estate news that’s driving the day. Join industry leaders who get ahead of their competition with our premium newsletter.