Morgan Stanley-led lending group originates $1.3bn Times Square financing package

Morgan Stanley, AIG and Apollo Global Management have combined lending power to originate a $1.3 billion financing package for RXR Realty’s revamp of 5 Times Square in New York City.

The September 6 refinancing deal marked the third major commercial real estate debt package issued to revitalize a key asset in Times Square.

RXR plans to upgrade the 39-floor, 1.1 million-square-foot Class A office property in a bid to attract and retain tenants. Scott Rechler, chairman and CEO at the New York-based investor and developer, said in a written statement that the total recapitalisation of the asset reinforces the fact that capital, like tenants, is attracted to the highest-quality buildings in transit-rich locations.

“It’s another example that there is a ‘flight to quality’ for office buildings – both for tenants and capital,” Rechler wrote.

RXR and its partners, which include New York-based REIT SL Green Realty Corp, are contributing an additional $300 million to fuel renovation of the site. As part of the deal, SL Green is converting an existing $139 million mezzanine loan into equity and partnering with RXR on the project.

A Bloomberg report cites the planned building improvements as including a new lobby, food and beverage locations, upgraded elevators, a fitness facility and meeting and event spaces as well as a golf simulator. The financing package includes incentives for leasing commissions, tenant improvements and general marketing toward prospective tenants.

5 Times Square’s tenant roster notably included consultancy EY in 2021 before the anchor tenant moved to an office at One Manhattan West near Hudson Yards. Bloomberg noted the streaming and media company Roku has since signed a long-term lease at 5 Times Square to help refill the roster.

The new debt package for 5 Times Square arrives nearly three months after JPMorgan took the lead on an ongoing $840 million refinancing wave for the tourist-heavy intersection. Alongside Bank of America and M&T Bank, JPMorgan is providing a $415 million refinancing deal to the New York-based Rudin Family to revitalize 3 Times Square. JPMorgan previously committed $425 million in debt to refinance Jamestown’s existing loans on One Times Square.