Meridian Finances 1412 Broadway Purchase
- Aug 08, 2014
An investors group led by Isaac Chetrit purchased 1412 Broadway, a 24-story, 415,135-square-foot office building near Times Square in Manhattan, layering on $165 million in permanent and mezzanine financing secured by Meridian Capital Group L.L.C.
Meridian, one of the nation’s largest commercial real estate finance and advisory firms, this week revealed the financing behind last month’s sale of the building from Harbor Group International to various entities controlled by Chetrit for $250 million. The property totals 378,000 square feet of office space and about 22,500 of retail space.
“The client required mezzanine financing to purchase the property but was averse to paying a higher interest rate typically associated with mezzanine debt,” David Hayum, Meridian senior vice president, said in a news release. “Meridian leveraged our substantial relationship with the lender to structure a loan with a favorable blended interest rate and unique repayment terms that were specifically tailored to the borrower’s needs.”
Hayum and Meridian Vice President Tal Savariego, both located in the company’s Manhattan headquarters, negotiated the five-year balance sheet financing that featured a competitive floating rate.
HGI had purchased the building at the northeast corner of Broadway and 39th Street in 2010 for $150 million. The firm spent about $10 million renovating the building, which was constructed in 1926, upgrading the lobby, entry façade, corridors and restrooms. The renovation included new windows and infrastructure improvements. HGI increased occupancy from 84 percent to 97 percent during its ownership. Tenants include Jones New York, One Step Up, Escada USA, OuterStuff, Securitas Security Services and Provident Bank.
The Midtown market had a strong second quarter, with leasing activity up 19 percent to 4.69 million square feet from 3.95 million square feet in the first quarter and average asking rents rising 6 percent year-over-year to $73.82 per square foot, according to CBRE’s second quarter Marketview report on the Manhattan office sector. Net absorption was a positive 827,000 square feet, compared to a negative 379,000 square feet during the first quarter, CBRE reported.
Meridian has been active in New York City in recent months. In late March, the firm arranged $200 million in acquisition financing for an 11-story, 194,500-square-foot mixed-use commercial building at 530 Broadway. Earlier in the month, it secured a $142 million mortgage for the purchase of a 10-story, 686,000-square-foot office property in the Fort Greene section of Brooklyn.