The flight to quality applies to lenders as well as office tenants. While older office properties with loans coming due are having trouble attracting occupants as well as refinancing, not so for the newest premium space at one of the priciest addresses in Manhattan.
A new 47-story office tower at 425 Park Avenue that was completed in 2022 and is 90% leased has been refinanced with a $911M debt package that pays off a loan of the same amount—originated in 2021 to complete construction and leasing.
Sumitomo Mitsui Trust Bank is the lead lender on a new five-year, floating-rate loan backed by the tower, which was developed by L&L Holding, Tokyu Land US Corp. and BentallGreenOak, Bloomberg reported.
The new loan pays off a debt package originated by Blackstone Real Estate Debt Strategies.
"This massive loan package demonstrates the lending market's continued capacity and appetite to finance ultra-premium, highly amenitized and well-located office towers owned and operated by first-rate sponsors," Rob Lapidus, L&L Holding president, said in a statement.
The 670K SF tower at 425 Park is anchored by Citadel, which occupies 440K SF spread across 22 floors. In 2022, Citadel inked a deal to lease the top two floors of the building for $300 per SF, according to a report in Bloomberg. Most of the tenants in the building are finance and investment firms.
The building at 425 Park, located between 55th and 56th streets, was the first full-block building to be completed on Park Avenue in nearly 50 years, but it took nearly 15 years to get done. One of the original partners in the project, Lehman Brothers, collapsed during the GFC in 2008.
Pritzker Prize winner Lord Norman Foster of Foster+Partners was commissioned to design 425 Park Avenue. Triple-height diagrid floors form the geometry of the building, culminating in a crown of three illuminated ornamental fins that pierce the skyline.
Situated within the apex of 425 Park Avenue, The Diagrid Club offers remarkable views of Central Park. The club also features an art installation from Japanese contemporary artist Yayoi Kusama, private rooms for transcendental meditation by the David Lynch Foundation, and "other thoughtfully curated amenities designed to connect the mind and body," according to the building's website.
In March, Blackstone secured a $308.5M refinancing package on the nearby Park Avenue Tower, a 36-story office building at 65 East 55th Street that also is a hub for financial services tenants.
The refi from Morgan Stanley on 65 East 55th replaced a $425M CMBS loan originated in 2019, also by Morgan Stanley.