By Gail Kalinoski
New York—Just months after buying out its joint venture partner in 31 W. 52nd St. in Midtown Manhattan, Paramount Group Inc. has completed a $500 million refinancing of the 786,647-square-foot, Class A office building.
The new 10-year loan is interest only with a 3.80 percent fixed rate. It was arranged with AXA Equitable Life Insurance Co., through its advisor Quadrant Real Estate Advisors LLC, and Metropolitan Life Insurance Co. Eastdil Secured LLC secured the financing for Paramount.
The New York City-based office REIT said it realized net proceeds of about $65 million after the repayment of the existing loan, swap breakage costs and closing costs. The property previously had a $413.5 million loan with a weighted average interest rate of 4.23 percent that was due to mature in December 2017.
“We continue to strengthen our balance sheet by refinancing existing debt at more favorable terms, affording us added financial flexibility,” Albert Behler, chairman, CEO & president of Paramount, said in a prepared statement. “We remain focused on executing our proven strategy and expanding our relationships with leading financial institutions that recognize the quality of our portfolio and strength of our platform.”
In September, Paramount announced it was buying out its joint venture partner in the 29-story building for $230 million in cash. The REIT did not disclose the identity of the previous co-owner. Located in the heart of Midtown in the Plaza District submarket, the property located between Fifth Avenue and Avenue of the Americas has views of Central Park, Rockefeller Center and other Manhattan landmarks. Paramount has owned it since late 2007, when it bought it from Hines, Deutsche Bank and RREEF. Some current tenants include the law firms Holland & Knight and Clifford Chance as well as investment firms Centerview Partners and Stone Harbor Investment Partners.
As Behler noted, the firm has been refinancing some of its portfolio. In December, Eastdil Secured arranged a seven-year loan for 1633 Broadway, also in Manhattan. Net proceeds from the refinancing were used to repay the existing $926 million loan, which was due to mature in December 2016 and had a weighted average interest rate of 5.35 percent. The new loan is interest only at LIBOR plus 175 basis points and can be increased by $250 million to $1.25 billion until three years after the closing.