RXR, TF Cornerstone Seek Federal Loan To Build $6.5B Supertall
Two of the biggest names in New York City’s commercial real estate sector are hoping to hit up the federal government to develop what they expect to be the most expensive tower in U.S. history.
RXR and TF Cornerstone are hoping to land more than $4.8B in federal loans to build 175 Park Ave., their proposed supertall in the heart of Midtown Manhattan, Business Insider reports.
They are seeking to tap two transportation-related federal lending programs through the Biden administration’s 2021 Infrastructure Investment and Jobs Act. But it could be President-elect Donald Trump who ultimately decides whether or not the project lands the funding.
RXR and TF Cornerstone want to replace the Hyatt Grand Central New York hotel — which Trump himself developed in 1980 — with a 1,575-foot-tall office and hotel tower. The proposed building would be North America's tallest by roof height, dwarf NYC landmarks like the Empire State Building, and be taller than some of the newest additions to the city's skyline, like JPMorgan Chase’s 60-story headquarters 270 Park Ave., which reaches 1,388 feet.
At an estimated $6.5B, it would also be the most expensive tower ever built in NYC, BI reported. And while lenders have shown a willingness to fund best-in-class office buildings in Manhattan, that has its limits when developers are looking to raise multiple billions of dollars.
Because the building is next to Grand Central Terminal and RXR and TF Cornerstone plan to spend around $550M on transit improvements, the project is eligible for the Transportation Infrastructure Finance and Innovation Act and Railroad Rehabilitation and Improvement Financing program.
“It’s an exciting project, tailor-made for the federal programs,” RXR Senior Advisor David Garten told Bisnow by phone Thursday. “There’s nobody that knows the site better than the president-elect.”
TF Cornerstone declined to comment.
The U.S. Department of Transportation programs, after the passage of the infrastructure law, can provide funding for private developments within a half-mile of commuter and intercity rail stations. They function as low-cost financing for projects, offering borrowers the chance to take 35 years or more to pay off the loan.
But RRIF and TIFIA are largely untapped, with around $30B in unused funds in RRIF alone, BI reported.
That may be related to the onerous qualification process for developments, which need to pass a federal environmental review in addition to receiving investment-grade credit ratings from a major ratings agency to be eligible.
The programs are discretionary, meaning the secretary of transportation, or even the president himself, could decide whether to grant funding to eligible projects.
Scott Rechler, CEO and chair of RXR, told BI that he believes Trump will be supportive of the project.
But questions remain over whether the incoming administration would approve the loan. Rechler is a prominent donor to Democratic political candidates, including to Joe Biden's victorious 2020 presidential campaign against Trump.
“Obviously at the appropriate time, we're going to be reaching out,” Rechler told the publication. “He understands office buildings better than any president before.”