The Abu Dhabi Investment Authority and Vornado Realty are tapping the commercial mortgage bond market for a cashout refinancing of a skyscraper in Midtown Manhattan.
The 39-story, Class A office building is located at the corner of Madison Avenue and 42 Street, just one block east of Grand Central Station.
The owner, a joint venture between Chadison (a subsidiary of ADIA) and Vornado, has owned the property in one respect or another since 1979. It has obtained a $500 million loan from Wells Fargo that is being used to refinance existing debt of $150 million a pay out $330.7 million equity distribution, according to rating agency presale reports.
While that is a sizeable sum, the borrower still has significant equity in the property CBRE puts the as-is value at $950 million, using a 4.5% cap rate. Moreover, DBRS takes comfort from the fact that the owners spent $121 million renovating the property just three years ago, in 2014, suggesting a long-term commitment.
DBRS’ valuation of $538.4 million is 43.3% discount to the appraiser’s value and is based on a 7.25% cap rate. This results in a loan-to-value ratio of 92.9%, which the rating agency characterizes as “higher leverage financing.”
The mortgage, which pays only interest, and no principal, for its entire seven-year term, is being securitized in a transaction dubbed MAD Mortgage Trust 2017-330M. DBRS expects to assign an AAA to the senior tranches of notes. {
Brookfield Property Partners, in a JV with Qatar's sovereign wealth fund, is securitizing a commercial mortgage for the newly constructed, 70-story tower near New York's revitalized Hudson Yards district.
Natixis will be marketing bonds as well loan-specific certificates tied to a $160 million first-mortgage taken secured by an Amazon headquarters building in Seattle, and a $92.5 million loan backed by a newly built addition to NYC's sprawling Memorial Sloan-Kettering Cancer Center campus.
Hines Interests used the $755 million loan from Goldman and JPMorgan to take out a $505 million mortgage from two insurance companies, MetLife and New York LIfe.
Industrial Logistics Properties Trust obtained a $650 million, 10-year fixed-rate mortgage on the portfolio from four banks; a $390 portion is being securitized in a single-borrower deal.
Peter S. Kalikow, a leading New York City real estate investor, is tapping the securitization market for a cash-out refinancing of a 1.3 million-square-foot, 48-story building at 101 Park Ave.
