Meridian Arranges $55M Refi of 5 Columbus Circle in NYC
- Jun 11, 2013
Five Columbus Circle, the 225,700-square-foot office tower at 1790 Broadway in Manhattan, has been refinanced to the tune of $55 million. With the assistance of Meridian Capital Group L.L.C., the owner, 1790 Broadway Associates L.L.C., reeled in a senior loan from a national balance sheet lender.
A 21-story, landmark structure with 8,600 square feet of ground-level retail space, Five Columbus Circle was originally developed in 1911 as the home of the U.S. Rubber Co. The lender came through with a loan featuring a 10-year term with full-term interest-only payments at a rate of 3.45 percent. According to Meridian, more than a few were eager to provide financing for the asset, given its location and stable operating history. And surely, Five Columbus Circle’s occupancy level didn’t hurt either. The Carrere & Hastings-designed building–home to the likes of Columbia Artists Management, Columbia University and Fordham University–is 96.5 percent occupied.
Well-sponsored, high-quality office buildings in good locations with high occupancy levels clearly attract attention in the capital markets, but lenders are certainly keeping open minds these days. A full tenant roster, for example, is not necessarily a prerequisite.
“There is plenty of liquidity for well-located properties with vacancy,” Aaron Appel, managing director at meridian, told Commercial Property Executive. “Most institutions would offer floating rate 3-5 year term debt which would provide capital to stabilize the asset and allow the borrower to then re-enter the market for longer term debt. Most long-term capital is lent solely based on in-place cash flow, to the extent that exists in an unstable asset, institutions will provide long-term capital based off a multiple of the in-place cash flow.”
It almost seems like old times–but it’s not. “There is a prevailing sense the market place is beginning to resemble the irresponsible lending parameters of 2006/2007, given some of the low-debt yields getting financed,” Appel said. “I would say that the market is competitive, but even low-debt yield loans have significant amounts of pure equity behind them rather than sub-debt and financially engineered capital stacks which were prevalent in 2006/2007.”