Aareal, Credit Agricole co-lead $500m loan for New York office tower

MetLife, PacLife and Bank ABC were also part of the syndicate for the SL Green-owned property.

SL Green and an institutional investor advised by JPMorgan Global Alternatives have secured a $500 million refinancing package for 919 Third Avenue from a group of lenders co-led by Aareal Capital Corporation and Credit Agricole Corporate and Investment Bank.

The New York-based office manager and its institutional partner finalized the deal on April 26, closing on one of the largest office financings this year.

Sources familiar with the deal told Real Estate Capital USA a total of five lenders were involved at closing, including Aareal, Bank ABC, Credit Agricole, MetLife and Pacific Life.

James Millon, vice-chairman and co-head of US large loans at CBRE, said 919 Third Avenue exhibited the necessary qualities – such as underwriting fundamentals, thoughtful structuring, loan pricing reflective of current market conditions and strong involved sponsors – to make it a solid risk-adjusted lending assignment for the syndicate.

He wrote that he expects more debt financiers to get involved post-closing. CBRE advised on the transaction with a team including Millon, fellow vice-chairman and co-head of US large loans Tom Traynor and Mark Finan, a vice-president on CBRE’s institutional debt advisory team.

The $500 million mortgage loan’s interest rate was set at 250 basis points over Term SOFR, which the borrowers swapped to a 6.11 percent fixed rate. The loan has a three-year term with two one-year extension options.

Harrison Sitomer, chief investment officer at SL Green, said the refinancing of 919 Third Avenue reaffirms liquidity in the market for “high quality assets with high quality sponsors,” a notion that has only become more relevant since concerns around Class B and C spaces gained more attention last year.

Doug Traynor, CEO of Aareal, said in a written statement that 919 Third Avenue was an ideal candidate for refinancing because of the asset quality, core tenant base and sponsorship. According to SL Green, the 47-story tower is 80 percent leased.

Lending activity to the office sector has continued to favor Class A and trophy assets, though headwinds and cautionary investment stances are persistent across the category. “Let’s not feed a false narrative and let perception worsen reality,” Millon said. “Do the work and get back to the basics and there’s a level for everything, even in the worst of times.”

Office-to-residential conversions have seen more traction in recent months while attention has been more firmly fixed on the massive refinancing wave set to arrive this year and next.