By Barbra Murray
Tishman Speyer has just revealed that it has obtained $1.8 billion in construction financing from Blackstone Mortgage Trust Inc. for The Spiral office project in Manhattan. The loan comes right on the heels of signing biopharmaceutical company Pfizer to an 800,000-square-foot lease at the 2.8 million-square-foot project.
The global real estate company ’s latest news is turning heads, not just for moving its $3.6 billion office project forward with a pre-lease and financing, but for the size of the financing. The closing of the deal marks BXMT’s largest single asset origination in its 52-year history. “Our well-protected, low leverage loan has an extremely strong credit profile and is consistent with BXMT’s strategy of lending on institutional quality real estate with strong sponsorship in gateway markets,” Steve Plavin, president & CEO of Blackstone Mortgage Trust Inc., said in prepared statement. The transaction marks the third time BXMT provided construction financing for Tishman Speyer.
The Spiral will be erected on a full block with the address of 66 Hudson Blvd. in the Hudson Yards district. Designed by architectural firm BIG | Bjarke Ingels Group to resemble a towering terrace-laden corkscrew of sorts, the 65-story building will feature Class A+ collaborative office space and 25,000 square feet of premier retail accommodations in the six-story base of the high-rise. Per Pfizer’s 20-year lease agreement, the biopharmaceutical company will make its home on 15 floors and take occupancy of segments of the lobby level as well. Commercial real estate services firm Cushman & Wakefield represented Pfizer in the lease transaction, having been tapped in early 2017 to help the company find a new state-of-the-art home and sell its current head offices totaling approximately 1 million square feet at 235 and 219 E. 42nd St.
With an anchor tenant and financing in place, Tishman Speyer is positioned to move ahead on The Spiral. The company plans to kick off construction activity with Turner Construction on the team as general contractor in June 2018. Tishman Speyer will rely on equity from its own purse and that of 12-plus institutional, pension fund and individual investors to fund the remaining $1.8 billion development cost.
The lending community continues to have warm and fuzzy feelings for commercial real estate borrowers. “In spite of the upward trend on interest rates since mid-2016 and more recently in the last six months, it’s great to be a borrower right now with a variety of financing options for all asset classes and business plans,” according to a March 2018 capital markets report by Cushman & Wakefield.
Good times or no, it’s not every developer that can procure nearly financing packages exceeding a billion dollars. However, there have been more than a few such deals in Manhattan over the last 12 months. Related Cos., Oxford Properties Group and Mitsui Fudosan America Inc., developers of the 50 Hudson Yards office tower, reeled in $3.8 billion in financing for the project, including a $1.5 billion senior construction loan. HFZ Capital Group got a boost for the development of The Eleventh, securing $1.25 billion in construction financing for the luxury mixed-use project in Chelsea. And more recently, Extell Development Co. revealed in January of this year that it had closed on a $1.1 billion construction loan for Central Park Tower, which, at a planned 1,550 feet in height, will hold the title of the world’s tallest residential building.
Renderings courtesy of BIG | Bjarke Ingels Group