SL Green Lands $500M Refi of 919 Third Avenue

While nearly two-thirds of NYC’s 400M SF office inventory—aging Class B and C buildings—may be exposed to distress as valuations drop and lending windows slam shut on refinancing, for the newer Class A buildings that are Manhattan’s premier office assets it’s business as usual.

SL Green and an institutional investor advised by JPMorgan Global Alternatives have completed a $500M refinancing of 919 Third Avenue, its 1.5M SF Class A office tower in Midtown.

The NYC office giant secured a new $500M mortgage loan with a three-year term and two one-year extensions from a bevy of banks led by Aareal Capital and Credit Agricole Corporate and Investment Bank.

The loan has an interest rate of 250 basis points over the term secured overnight financing rate—an agreement that is structured in anticipation of further Fed rate hikes, which the lenders have swapped to a fixed rate of 6.11%.

The international team of lenders involved in the refinancing of the 47-story Midtown East office tower included Bank ABC, MetLife and PacLife. CBRE advised on the transaction.

The participation of life insurance lenders, who have been pulling back from lending to office properties, underlines the strength of newer Class A buildings, which have benefited by a post-pandemic flight to quality.

The building at 919 Third is 80% leased, with tenants including Bloomberg L.P., Shulte Roth & Zabel, and Mintz.

“919 Third Avenue is an ideal candidate for refinancing given the preeminent asset quality, core tenant base and respected sponsorship, Doug Traynor, CEO of Aareal Capital, said in a statement.

In a Q1 earnings call last week, SL Green CEO Marc Holliday called the challenging climate in the NYC office market “another moment of significant change as businesses rethink their office needs.”

This week, the company hailed the 919 Third financial package as vote of confidence in the real estate giant’s ability to weather the storm in Manhattan.

“We are pleased to have secured this refinancing for 919 Third Avenue, which reaffirms the liquidity in the market for high quality assets with high quality sponsors,” Harrison Sitomer, SL Green’s chief investment officer, said in a statement.

“The deep relationships we have with financial institutions around the world coupled with the caliber of our portfolio and operating platform give us confidence in our ability to continue to execute in the capital markets, notwithstanding current credit market conditions,” Sitomar said.

SL Green is partnering with Caesars Entertainment on a bid to redevelop 1515 Broadway into a Times Square casino, a leading contender for one of three bids that will be awarding with casino licenses in and around NYC by the state later this year.