Cushman & Wakefield Lines Up $415M Refi for NYC High-Rise

Angelo Gordon & Co., Normandy Real Estate Partners and George Comfort & Sons are the owners of the 750,000-square-foot property at 575 Lexington Ave. in Midtown Manhattan.
75 Lexington Ave., New York City

With the assistance of commercial real estate services firm Cushman & Wakefield Inc., a joint venture of Angelo, Gordon & Co., Normandy Real Estate Partners and George Comfort & Sons Inc. recently secured $415 million in financing. The partners relied on their jointly owned office skyscraper at 575 Lexington Ave. in Midtown Manhattan’s Plaza District as collateral.

C&W orchestrated the nearly half-billion financing package through Paramount Fund VIII, and entity of Paramount Group Inc. “[The opportunity] mostly appealed to banks and debt funds/high yield funds given the floating rate request,” Alexander Hernandez, executive director of Cushman & Wakefield Inc.’s Equity Debt & Structured Finance platform, told Commercial Property Executive. In addition to Hernandez, the C&W team that represented the borrower included Steve Kohn, Dave Karson, Gideon Gil, Alex Lapidus and Noble Carpenter from Equity Debt & Structured Finance, and Adam Spies of the firm’s Capital Markets group.

Angelo Gordon, Normandy and GCS acquired 575 Lexington in 2015, snapping up the 35-story building for $510 million from a partnership of New York Life Real Estate Investors, Prudential Real Estate Investors and Normandy. Originally developed in 1958, the Sylvan & Robert Bien-designed tower has benefited from substantial renovations, including in 1990, 2008 and again in 2015, when the upgrades yielded LEED Gold certification. In a bid to bolster the property’s profile, the current ownership is instituting more changes, having already invested $25.9 million—for now. A $26.2 million capital plan will result in additional upgrades this year, courtesy of a program presently in progress.

Good times in the office market

Today 575 Lexington is 86 percent occupied by a diverse group of tenants, including Cornell University, which expanded its space in the building by 30,000 square feet in 2015 for a total occupancy of 210,000 square feet under a 15-year lease. The ownership’s enhancement program will place the asset in an even better position to benefit from positive conditions in the Manhattan office market.

“Office leasing has continued at a torrid pace,” according to information from C&W’s Tri-State Research Department. After 3.3 million square feet of new Manhattan office leasing activity in April, another 3.4 million square feet was completed in May—the highest two-month total since February to March of 2014 and the fourth highest on record.

The combination of a hospitable market and a revamping bodes well for 572 Lexington. “The owner’s business plan has been well received by the leasing market and the additional capital program will finish off the asset’s repositioning nicely,” Hernandez said in a prepared statement.

Image courtesy of Cushman & Wakefield