Blackstone and Fisher Brothers landed a sizable mortgage for a Midtown Manhattan office tower, but the clock is already ticking on when the debt comes due.
The landlords at 1345 Sixth Avenue scored an $850 million mortgage for the office property, Crain’s reported. On the surface, that’s a positive sign for the 2-million-square-foot property, a 50-story beacon that’s 92 percent leased.
The term on the lease is rather short, however, possibly showcasing the hesitancy lenders feel towards the sector. Morgan Stanley, Citigroup and JPMorgan Chase provided debt set to mature in a mere two years, one-tenth of the term of the existing loan. It’s unclear if this term change came from the landlords or the lenders, though it gives ownership an opportunity to refinance at a more attractive rate in a matter of months.
The two-year term comes with three one-year extension options should certain financial conditions be met. The mortgage was disclosed in a report from credit rating agency KBRA.
Blackstone and Fisher Brothers declined to comment to the publication. As part of the deal, Fisher Brothers made a $175 million down payment and Blackstone made a similar $168 million down payment. Half of the loan proceeds are earmarked for buying out other equity owners, according to KBRA.
Following reports of interest from earlier this year, Blackstone ultimately purchased a stake in the property. It had been three years since Blackstone’s last big move in Manhattan’s office market, the acquisition of a 49 percent stake in One Manhattan West from Brookfield and the Qatar Investment Authority in 2022, which valued the 67-story tower at $2.85 billion.
Last year, Intercontinental Exchange signed a lease at 1345 Sixth Avenue for 143,000 square feet. A month before, law firm Paul, Weiss, Rifkind, Wharton & Garrison signed a 20-year lease for 765,000 square feet, one of the largest office leases in the country in 2023.
The building’s performance has been bolstered by a $120 million capital project where Fisher updated the exterior and added an amenity floor and a public art installation.
But challenges remain. Ownership needs to pony up $200 million for tenant improvements, largely on behalf of Paul Weiss. That tenant also secured $150 million in rent concessions, a hit to the bottom line considering it occupies 42 percent of the property.
— Holden Walter-Warner
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