Valuation report sheds new light on One Vanderbilt’s $ 3 billion refi


Marc Holliday from SL Green with One Vanderbilt. (SL Green, KPF Architects)

One of the largest commercial mortgage-backed securities loans in history closes in a few weeks, according to a new ratings report released Wednesday by DBRS Morningstar.

A group of nine banks led by Wells Fargo and Goldman Sachs are putting together a $ 3 billion refinancing for SL Green, the National Pension Service of Korea and Hines’ One Vanderbilt, according to the report.

The only true first reported that the transaction was in the works in April. According to DBRS, the new financing will pay off $ 1.395 billion in existing debt and return approximately $ 1 billion in equity to SL Green and its partners, although the exact numbers are subject to change.

The CMBS mortgage will consist of nine Senior A-Notes, each from a different lender. Wells Fargo carries half of the total debt, or $ 1.5 billion, while Goldman Sachs contributes $ 600 million. Bank of America, Bank of China, Bank of Montreal, Deutsche Bank, and JPMorgan Chase will each lend $ 150 million, and Barclays and Citi will each bring in $ 75 million.

According to a May Newmark Knight Frank estimate quoted in the DBRS report, the 1.65 billion square foot office tower next to Grand Central is worth $ 4.1 billion as it is, and will be worth $ 5 when stabilized Have billions of dollars.

DBRS’s own assessment of the property’s value is more conservative at just $ 2.97 billion – less than the value of the debt – but the overall valuation is still glowing.

“Not only is the collateral exceptionally conveniently located, it is also of relatively unsurpassed investment quality, even among New York’s existing trophy office real estate offerings,” the report said.

“Clearly superior asset quality and collateral market conditions are expected to fuel a new cap on office rents in Midtown Manhattan, a trend that is clearly supported by active collateral leasing during the height of the ongoing coronavirus pandemic.”

One Vanderbilt’s top tenants include TD Bank, Carlyle Investment Management, McDermott Will & Emery, TD Securities, and Greenberg Traurig.

While rents for individual tenants are not disclosed, the property’s net operating income is expected to be in excess of $ 200 million per year, according to the lender. This includes $ 24 million in base rent for the observation deck, which is expected to open in October.

Daniel Boulud’s upscale on-site restaurant, Le Pavillon, recently opened and is fully booked through September, according to the report.

With a weighted average remaining lease term of 17 years, hardly any tenant fluctuation is to be expected over the term of the ten-year loan. On Monday, SL Green announced three more leases that brought the property’s occupancy to 89 percent.

Thanks to the low interest rate environment and a withdrawal of other types of lenders, the CMBS market has become a major source of trophy property refinancing in recent months.

But few single-asset / single-borrower CMBS transactions have ever hit the $ 3 billion mark. The largest SASB-CMBS deal last cycle, the $ 5.6 billion BX 2019-XL, comprised a 65 million square foot portfolio of hundreds of industrial properties across the country.

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