By Veronica Grecu, Associate Editor
The New York City-based REIT worked with joint lead arrangers Landesbank Baden-Württemberg New York Branch, Landesbank Hessen-Thüringen Girozentrale, DekaBank Deutsche Girozentrale, ING Capital, LLC and Wells Fargo Securities, LLC to secure the seven-year loan for the 48-story Paramount Plaza skyscraper sitting at 1633 Broadway.
According to a news release, the net proceeds from the refinancing were used to repay the existing $926 million loan—which was scheduled to mature in December 2016 and had a weighted average interest rate of 5.35 percent—and fund $42 million of swap breakage costs. The new loan is interest only at LIBOR plus 175 basis points and can be increased by $250 million to $1.25 billion until the third anniversary following the closing.
“This refinancing is a testament to the credit markets’ confidence in Paramount’s Class A portfolio,” said Albert Behler, chairman, CEO & president of Paramount. “With lenders’ conviction in Paramount’s proven track record and ability to proactively manage leasing, we were able to execute a timely transaction with favorable terms in a challenging market environment.”
The refinancing comes more than four years after Paramount purchased the remaining 49 percent from Merrill Lynch and Morgan Stanley in a deal that valued the office tower at $2 billion, according to Crain’s New York Business.
Situated between 50th and 51st Streets in Midtown Manhattan’s Central Business District, the 1970-built tower occupies the former site of the Capitol Theatre and offers 2.6 million square feet of Class A office space. Apart from a prestigious tenant roster including Allianz—who placed a sign with their name and logo on the top of the building several years ago—, Warner Music Group, Showtime Networks and financial services giant Morgan Stanley, the building is also home to the Gershwin and Circle in the Square theaters.
Image via Google Street View