NEW YORK CITY—Paramount Group has completed a $1 billion refinancing of 1633 Broadway, a 2.6 million-square-foot, trophy office building between 50th and 51st Streets.

The new seven year loan is interest only at LIBOR plus 175 basis points—and can be increased at the company's option—by $250 million to $1.25 billion, until the third anniversary following the closing, if certain performance hurdles relating to the property are satisfied.

The net proceeds from the refinancing were used mainly to repay the existing $926 million loan and fund $42 million of swap breakage costs. The existing loan was set to mature in December 2016 and had a 5.35% weighted average interest rate.

"This refinancing is a testament to the credit markets' confidence in Paramount's Class A portfolio," says Albert Behler, chairman, CEO and president of Paramount. "With lenders' conviction in Paramount's proven track record and ability to proactively manage leasing, we were able to execute a timely transaction with favorable terms in a challenging market environment."

Landesbank Baden-W rttemberg New York branch, Landesbank Hessen-Th ringen Girozentrale, DekaBank Deutsche Girozentrale, ING Capital  and Wells Fargo Securities served as joint lead arrangers. Landesbank Baden-W rttemberg New York branch will serve as administrative agent and Wells Fargo Bank National Association will serve as syndication agent. The company engaged Eastdil Secured to secure the financing.