It’s official. The $ 3 billion refinancing for A Vanderbilt – the trophy office tower which was the talk about the city in recent years – closed.
Wells fargo and Goldman Sachs led the 10-year fixed rate Commercial Mortgage Backed Securities (CMBS) financing, which was securitized in the SLG Office Trust 2021-OVA transaction with a single asset and a single borrower (SASB). Other lenders in the deal include Bank of America, bank of china, Bank of Montreal, German Bank, JPMorgan Chase, Barclays and Citigroup.
The 1.7 million square foot, 67 story skyscraper is owned by a joint venture between SL Green Realty Corp., Korean National Pension Service and Hobbies.
The financing represents the largest fixed rate CMBS financing ever secured by a single asset and – as several other major financings signed in recent months have proven – the CMBS market offered the most competitive execution for the deal.
“I don’t think we would have been able to achieve this level of product in a club deal with multiple banks together or a syndicated banking deal,” Robert schiffer, managing director of SL Green, told Commercial Observer on Monday. “So I think CMBS was really the only way to achieve that level of product, and secondly, because we were confident that we would get a price that was better than any other execution. ”
The refinance has a 2.86 percent coupon – or 2.94 percent including hedging costs – and takes out $ 1.75 billion in construction debt on the property.
Funding was – not surprisingly – very competitive. While the eventual syndicate of lenders reads like a “who’s who” of the top nine CMBS lenders, the sponsors could easily have added 10 more to the group, depending on the level of interest in the deal, Schiffer said.
“I think this [deal] was on everyone’s radar, ”he said. “And, more importantly, what blew us away was the depth and quality of the bond buying portfolio. We’ve been oversubscribed twice – across the facility – and to a bunch of best-in-class bond buying institutions. “
Wells Fargo took the much sought-after left leader position in the refi, and also led the construction financing of the asset in September 2016. In addition, Wells and Goldman led the $ 1.25 billion construction financing. dollars for the redevelopment of the SL Green offices in Madison Avenue last november.
“Wells Fargo is delighted that SL Green has appointed our institution as the lead lender for the financing of the construction of this important property, and to continue as the lead lender for the largest fixed rate CMBS financing ever guaranteed by only one asset, “mentioned Robert rosenberg, a general manager of Wells Fargo, commented. “One Vanderbilt is truly a trophy office building, and it’s no surprise that CMBS funding has been grossly oversubscribed.”
Putting $ 3 billion in funding on a Manhattan trophy office tower during a global pandemic isn’t for the faint-hearted, but the refinancing has been sealed at a time when there is a flurry of excitement for the New York’s future and confidence in its office sector.
“Things have really changed over the past six months,” Schiffer said. “When we started our talks in January, there was a bit of apprehension in terms of executing a deal of this size and scale – given where we were then, in terms of returning to power and of some of the headwinds facing New York.
“But, that really changed dramatically when we started the process in earnest in April, and then when we started pre-market conversations with potential bond buyers in May, the tone was very different,” he said. added Schiffer. “People were seeing the return of New York and were excited about the opportunity to invest in the best new construction and highest quality rent in the market. I think this was confirmed in the bond buying book and the execution we were able to achieve. ”
Consolidating this confidence, 13 leases have been signed on the asset since the start of the pandemic, raising One Vanderbilt’s occupancy rate from just under 75% to almost 90%. In June, SL Green announced that it had signed 124,000 square feet of new leases at the office tower.
Today, the building has a diverse roster of tenants from financial, technology, legal and real estate firms, including TD Securities, The Carlyle Group, Oak Hill Consultants, Sentinel Capital Partners, Greenberg Traurig, DZ Bank, Hodges Ward Elliott, MSD Partners, Walker & Dunlop and SL Vert.
These leases are a testament to the uniqueness of the asset, Schiffer said, as well as the confidence in New York City itself, with the recent buzz of energy around the city’s reopening being almost palpable.
“Again, you see that excitement in the bond buying book here being twice oversubscribed. This is a testament to not only the asset – and the asset is a vital part of it, of course, but also of the asset. ‘optimism surrounding the return of the New York offices,’ he said.
Time waits for no one, and SL Green gets things done quickly, focusing on opening the building’s observatory, SUMMIT A Vanderbilt, now that the refinancing is closed.
“We have completed the execution of the permanent loan, and now we will focus on the TOP… starting today,” said Schiffer. “We open our doors on October 21 of this year, in the fall. We believe it will be a game-changing, artistic and immersive entertainment venue that will have a real impact on the culture and entertainment scene here in New York City.
Chatham Financial acted as advisor to SL Green in connection with the transaction.