SL Green JV Eyes $2B Refi for NYC Office Tower
Seven banks will co-originate the mortgage loan.
Image courtesy of Yardi Matrix
A partnership between SL Green Realty and Mori Trust Holdings Inc. will soon receive a $2 billion mortgage loan for the 1.8 million-square-foot office tower at 245 Park Ave., according to a Fitch Ratings report.
JPMorgan Chase Bank, Bank of America, German American Capital Corp., Bank of Montreal, Goldman Sachs Bank USA, Societe Generale Financial Corp. and Citi Real Estate Funding Inc. are expected to co-originate the note.
Proceeds from the five-year, fixed-rate loan, alongside $31.6 million in cash equity, will retire $1.7 billion of previous debt, as well as fund $226.6 million in outstanding landlord obligations and pay approximately $37 million in closing costs.
Additionally, the ownership will use $119.1 million for future rent concessions, $81.3 million for existing approved tenant improvements, and $26.2 million for redevelopment costs. Trimont and Situs Holdings will act as servicer and special servicer in the transaction, which is scheduled to close on Oct. 20, 2026.
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The office building at 245 Park Ave. has been under SL Green’s ownership since 2018, when the company acquired it from HNA Group Co. for $1.7 billion, or $1,008 per square foot. In 2023, Mori Trust purchased a 49.9 percent stake in the asset, in a deal valued at $2 billion. The office tower’s value is currently estimated at $2.7 billion.
Earlier this year, SL Green Realty received another large mortgage loan for one of its Manhattan office properties, namely the 1.3 million-square-foot One Madison Ave. The ownership refinanced One Madison Ave. using a $1.7 billion package issued by Wells Fargo Bank, Goldman Sachs Mortgage Co., JPMorgan Chase Bank, Bank of America and German American Capital Corp.
Approximately $289.2 billion in loans, tied to 14,000 office properties across the U.S. have recently matured or are scheduled to mature by the end of 2028, according to a recent Yardi Matrix report, accounting for 33.5 percent of all office debt.
245 Park Ave. earns LEED certification
Built in 1966 as the American Tabacco Company Building, the property has served as the headquarters for American Tabacco Co., American Brands and Bear Stearns. After several renovation programs, the 44-story office building has received a LEED Gold certification this year. The high-rise is currently in the final stages of a $169.9 million redevelopment plan which targets the lobby area and shared amenities. Occupying an entire block at the intersection of Park Avenue, Lexington Avenue, 46th and 47th Streets, 245 Park Ave. is adjacent to Grand Central Terminal.
245 Park Ave. is currently fully leased, boasting a tenant roster which includes Ares Management, Societe Generale, Houlihan Lokey Inc., Carlyle Group, EQT Partners Inc. and TPG Angelo Gordon. Ares Management occupies approximately 343,600 square feet at the property, across floors 13, 31, 37 and 39-44, with plans to expand next month across the entire 36 through 38 floors. The expansion will entail occupying Rabobank’s former office space, whose lease expired at the end of September. Similarly, Houlihan Lokey has recently entered into a lease expansion agreement on the 21st floor. The property features floorplates ranging between 37,000 and 79,508 square feet, as well as 30 passenger elevators.
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Through August, Manhattan’s average office listing rate rose 6.9 percent year-over-year to $72.70 per square foot, widening the gap between the borough and the other markets in Yardi Matrix’s Top 30, according to a recent report. During the same month, the office vacancy rate fell 340 basis points on a trailing 12-month basis to 10.2 percent, in line with pre-pandemic values.
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