MetLife Investment Lines Up $73M Refi for Manhattan Office
- Jan 15, 2018
ATCO Properties & Management has closed on a $72.8 million refinancing deal for 240-246 West 35th St., a 165,000-square-foot office building in Manhattan’s Garment District.
MetLife Investment Management provided a five-year, fixed rate loan. Jordan Roeschlaub and Dustin Stolly of Newmark Knight Frank arranged the transaction.
“The appeal [included] the property’s position in the path of migration to the west side,” Neil Adamson, ATCO Properties & Management’s senior vice president, finance and acquisitions, told Commercial Property Executive. “Also, the energy that is emerging on the 35th Street streetscape as new retail is bringing more foot traffic through the block, the ability to increase rental income by renewing long-standing tenants and leasing existing vacancy at current market rates.”
Additionally, Adamson cited the appeal of the deal to be the opportunity to raise the standard of quality in the submarket and deliver a best-in-class tenant experience by improving building infrastructure, building high-quality tenant installations, and bringing best practices from its Midtown portfolio to the Garment District.
The property is located just steps away from Penn Station and Herald Square, and is situated in the heart of 35th Street, between 7th and 8th Avenues.
The company originally acquired the 18-story Manhattan office building in 2016 and was able to refinance the property soon after, thanks to the significant value the company created by virtue of new leases executed and capital projects implemented last year.
Since acquiring the building, ATCO has implemented several improvements at the building, including a new lobby renovation, common corridor upgrades and sidewalk improvements. Currently, an elevator upgrade/modernization is underway.
A strong strategy
ATCO’s strategy involves looking for opportunities in growth markets nationwide, in cities such as Austin, Nashville, and Charlotte.
“Similarly, we view the Garment District as a growth submarket within Manhattan’s office market and find that northward pressures from Midtown South and the shift in the center of gravity resulting from the emergence of Hudson Yards uniquely positions the Garment District for growth in rents as well as an evolution in the makeup of the submarket’s tenancy,” Adamson said.
ATCO has executed 47,000 square feet of new leases and renewals during 2017, including a 10-year, 10,100-square-foot renewal with Newsday; a five-year, 11,070-square-foot lease extension with technology company Fidelus Technologies; a five-year, 11,221-square-foot renewal with fashion designer Jason Wu; a five-year, 4,634-square-foot lease with Carrier Enterprises Northeast LLC; a five-year 1,019-square-foot lease with Nexguard Labs; and a new 12-year, 5,181-square-foot retail lease with Café Metro.
The company also established a joint venture partnership in the property with Israeli-based Migdal Group in October 2017. As part of the deal, ATCO retains a 51 percent majority ownership interest in the building, while Midgal holds a 49 percent interest.
The acquisition represents ATCO’s first in the Garment District and its 12th as part of its City Center Real Estate Program
Earlier this month, ATCO signed a 12-year, 5,181-square-foot Manhattan retail lease with Café Metro at the Mary McFadden Building.
Image courtesy of ATCO Properties & Management