This Week's N.Y. Deal Sheet: Flatiron Building Conversion Lands $357M
Wheels are officially in motion for the residential conversion of the Flatiron Building, with the owners of the iconic New York City property securing fresh financing this week.
The Brodsky Organization and its partners, GFP Real Estate and the Sorgente Group, scored a $357M loan for the project from Tyko Capital, The Real Deal reported.
The Brodsky Organization paid $40M to buy a 25% stake in the building last year and lead its conversion, following a long-running rift between the building’s former owners that eventually led to two auctions for the property.
The new partnership plans to convert the 22-story, 255K SF landmarked office building into 60 residential condos. Newmark’s Jordan Roeschlaub and Nick Scribani led the team that put together the loan from Tyko.
TOP FINANCING DEALS
Tishman Speyer made history this week, signing the largest loan issuance for a single office asset ever with a $3.5B refinancing agreement for Rockefeller Center. Bank of America and Wells Fargo served as co-lead managers for the single-asset, single-borrower CMBS loan, which has a five-year term and carries an interest rate a tick above 6.2%. The debt will be used to pay off the $1.7B, 20-year CMBS loan and additional mezzanine financing that was scheduled to mature in May next year. The loan proceeds will also fund tenant improvements and other investments in the 7.3M SF, 13-building campus.
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RXR recapitalized its landmarked Chelsea building at 620 Sixth Ave. by bringing in a new partner and securing new debt. The Scott Rechler-led developer sold the 700K SF office and retail building into a 50-50 venture between RXR's Office Recovery Fund and private equity firm Hudson Bay Capital. The partnership secured a $320M, five-year loan facility from a consortium of lenders including Blackstone and Goldman Sachs, Commercial Observer reported. City property records showed a $334M loan from Blackstone Mortgage Trust, consolidating the previous loans totaling $421.5M tied to the building.
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KKR netted a $145M acquisition loan from Sumitomo Mitsui Banking Corp. to buy a Downtown Brooklyn multifamily rental with 327 units, Commercial Observer reported. The 193K SF building, known as The Paxton and located at 540 Fulton St., opened last year. The building benefits from the 421-a tax break, with 99 units reserved as affordable housing. KKR and Dalan Management formed a joint venture this summer to buy the 43-story building from Jenel Real Estate for $240M, The Real Deal reported at the time. Jordan Roeschlaub and Chris Kramer of Newmark arranged the acquisition loan.
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MF1 has agreed to lend $170M to Chess Builders for its 218-unit multifamily development at 218 Front St. in Brooklyn’s Vinegar Hill neighborhood, Commercial Observer reported. The sum will serve as takeout construction financing for the building, which is now in the lease-up phase. The bridge loan allows Chess Builders to retire a 2022 construction loan from Valley National Bank. Leah Paskus of Landstone Capital arranged the loan from MF1.
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Strategic Hotels & Resorts, the parent company that owns JW Marriott Essex House, has refinanced the Midtown West hotel, PincusCo reported. The loan is worth $85M, Commercial Observer reported, and is part of a $1.6B CMBS transaction that covers nine hotels owned by Strategic Hotels & Resorts.
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The Roman Catholic Archdiocese of New York notched a $250M refinancing deal for three Manhattan properties, PincusCo reported. The properties are a hotel building at 455 Madison Ave., an office building at 457 Madison Ave. and a retail building at 35 E. 50th St. Goldman Sachs provided the financing, replacing a previous $200M loan from JPMorgan Chase.
TOP LEASES
Mirae Asset Securities has signed a 35K SF lease at SL Green’s 810 Seventh Ave., doubling its existing space to take over a full floor, CO reported. The lease means that Mirae, a global financial services provider, will now have the 37th floor of the building to itself for the next 12 years. Harry Blair, Tara Stacom, Barry Zeller, Justin Royce and Pierce Hance of Cushman & Wakefield represented the landlord, while Neil Goldmacher and John Moran of Newmark represented the tenant.
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Bloomberg signed its second nearly 1M SF office lease in Manhattan this year. The financial services and media firm took 925K SF at SL Green’s 919 Third Ave., a 1.5M SF, 47-story office building in Midtown East. The REIT recently finished renovations on the building’s lobby, entrances and elevator cabs. Bloomberg’s deal extends its 749K SF lease in the building for the second through 18th floors until 2040 and adds a further 176K SF for 15 years on part of the 34th floor as well as the entire 35th floor and 41st to 44th floors. CBRE’s Howard Fiddle, Chris Mansfield, Zach Weil and Ryan Luck represented Bloomberg. Robert Alexander, Ryan Alexander, Emily Chabrier, Taylor Callahan, Alex D’Amario and Nicole Marshall, also of CBRE, represented SL Green.
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The Chan Zuckerberg Initiative has signed for 38K SF at Columbia University’s Studebaker Building at 615 W. 131st St., Commercial Observer reported. The space will serve as the Chan Zuckerberg Biohub New York, where scientists from Columbia, Yale University and The Rockefeller University will collaborate on bioengineering immune cells. The initiative already has labs in San Francisco and Redwood City, California, and Chicago. The NYC lab will be similar to those facilities and was made possible in NYC with $10M from the New York City Economic Development Corp., $10M from Empire State Development and $250M from CZI, an initiative launched by Facebook founder Mark Zuckerberg and his wife, Priscilla Chan. John Isaacs and Joseph DeRosa of CBRE repped CZI.
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Spear Street Capital has signed a new tenant at 641 Sixth Ave., Commercial Observer reported. Swiss-Dutch fragrance and ingredient company DSM-Firmenich took 45K SF in the eight-story Chelsea building, where the asking rent was $118 per SF. The new lease will see the company move more than 2 miles from its space at 625 Madison Ave. Paul Amrich, Neil King, Zac Price, Meghan Allen and Shay Kenney of CBRE repped the landlord, and James Quinn and Gary Youm of JLL represented the tenant.
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Jack Resnick & Sons has signed two deals totaling 20K SF at 8 W. 40th St., according to a release. Middlegate Securities extended its 13K SF lease for another 10 years but will move from the third and fourth floors to the fourth and fifth floors. Merlyn Mind, a tech firm that provides artificial intelligence digital assistant solutions to educators, renewed its 7K SF lease for two years. The landlord was represented in-house in both deals by Brett Greenberg and Fran Delgorio. Middlegate was repped by Benjamin Blumenthal and Ralph Chattah of Noah & Co., while Merlyn Mind was repped by Evan Algier and Nick Masi of Cushman & Wakefield.
TOP SALES
PGIM Real Estate has sold a residential complex in the Gramercy Park neighborhood for less than it paid for the buildings, Crain’s New York Business reported. Canvas Investment Partners bought 210-220 E. 22nd St. for $104.5M. The properties in the deal add up to a total of 205K SF. PGIM Real Estate, the property investment arm of Prudential Financial, bought 220 E. 22nd St. in 2015 for $123M and 210 E. 22nd St. in 2010 for $49.2M. Canvas’ purchase is part of a joint venture with Declaration Partners and Los Angeles-based Tokyu Land US Corp. The acquisition was partially financed by a $63M loan from Tokyu Land US Corp., which is part of Japanese company Tokyu Fuson Holdings Group.
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Retired boxer Floyd Mayweather Jr. is under contract to buy a 1,000-unit affordable housing portfolio spanning 60 buildings from Black Spruce Management for $402M, The Real Deal reported. The exact buildings covered by the deal aren’t yet clear, but part of the deal for the portfolio closed last week, and the rest is expected to close by early 2025 at the latest. The deal isn’t Mayweather’s first venture into commercial real estate. It follows investments that he has made in nine New York City skyscrapers alongside SL Green.
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Tavros Capital and Charney Cos. shelled out $160M for 175 Third St., a development site in Brooklyn’s Gowanus neighborhood, The Real Deal reported. RFR is selling the land — the deal is under contract — and could walk away with a 39% profit on the $115M it paid for the site in 2018, Commercial Observer reported. Ackman-Ziff’s Andrew Sasson is brokering the deal, which should provide a cash injection for RFR as it deals with impatient lenders seeking to foreclose on other properties it owns.
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Extell Development has acquired 655 Madison Ave. from Williams Equities for $160M, according to city property records. The building, which spans 24 stories, is already slated for demolition. Extell is reportedly planning to build a luxury residential and retail building in place of the 200K SF, 1950s-built office tower. Extell’s acquisition was backed by a $150M loan from Tyko Capital.
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CIM Group has acquired the 11-story 88 University Place office building for $49M in a foreclosure sale, PincusCo reported. Arch Cos. bought the building in 2022, scoring a $70.5M refi from CIM Group to renovate the building, The Real Deal previously reported. CIM Group filed a foreclosure suit this summer, alleging that mortgage and mezzanine loans had been in default for a year.
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Continental Ventures has sold a retail condominium at 92 and 94 Greene St. in SoHo to Acadia Realty Trust for $44M, Commercial Observer reported. The all-cash deal is Acadia’s 13th purchase in the neighborhood, following acquisitions of 37-39, 41, 45, 47 and 51 Greene St. Newmark’s Brett Siegel, Evan Layne, Ariel Schuster and Adam Spies brokered the sale.
