SL Green and Prudential Financial are nearing a significant refinancing of a trophy office building in Manhattan, but not without putting up a chunk of money themselves.
The co-owners of 11 Madison Avenue are close to securing a refinancing package for their $1.4 billion mortgage backing the Midtown South property, Crain’s reported. The refinancing’s five-year term would be half the length of the expiring debt, according to an S&P Global report.
There are significant drawbacks to the forthcoming debt, which is expected to be priced on Monday. The interest rate is expected to jump from 3.6 percent to 5.8 percent and the owners will need to put up a $52.5 million down payment to secure the loan.
Both landlords declined to comment to the outlet.
SL Green acquired the full-block office property from the Sapir Organization and CIM Group in 2015 for $2.6 billion. A year after the acquisition, SL Green offloaded a 40 percent stake to Prudential’s PGIM Real Estate for $480 million.
SL Green financed its acquisition with a $1.1 billion senior CMBS loan and $325 million in mezzanine debt.
As of March 2020, Credit Suisse was the main tenant at the property, according to a rent roll, occupying 1.3 million square feet while paying slightly below-market rate at $65 per square foot. The average base rent for the property at that time was $70.47 per square foot.
In the spring, Pinterest was negotiating for 80,000 square feet at the 2.3 million-square-foot property, setting itself up to be one of the building’s largest tenants. The tech company ultimately took 83,000 square feet, according to the New York Post, joining a tenant roster including Fidelity, Suntory, Tempus AI and William Morris Entertainment; the building is 93 percent occupied, according to S&P.
Marc Holliday’s firm is staying busy elsewhere in New York City. SL Green is among those entertaining bids to acquire Paramount Group as the real estate investment trust plots a “strategic review.”
— Holden Walter-Warner
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