Paramount Closes $850M Financing of NYC High-Rise

The group acquired the 45-story asset in 2008 for $1.5 billion.

By Barbra Murray, Contributing Editor

1301 Avenue of the Americas, Manhattan, New York
1301 Avenue of the Americas, Manhattan, New York

New YorkParamount Group Inc. has wrapped up the financing of 1301 Avenue of the Americas, a 1.8 million-square-foot office tower in Manhattan, to the tune of $850 million. It’s all in the name of bolstering the balance sheet.

A 45-story building developed in 1964, 1301 Avenue of the Americas has been part of Paramount’s portfolio since the office REIT acquired it for $1.5 billion in 2008. The premier office destination, which has served as headquarters to many a major company over the years, also features 30,000 square feet of ground-level retail space, as well as a lower-level connection to Rockefeller Center.

The opportunity to provide financing for the Midtown Manhattan asset was apparently a big draw in the insurance segment of the lending community. A group consisting of AXA Equitable Life Insurance Co., MetLife Real Estate and New York Life delivered for Paramount. The financing came in the form of a five-year, interest-only loan with the option of two one-year extensions. Scheduled to mature in October 2021, the loan has an initial weighted average interest rate of 2.77 percent.

“By capitalizing on today’s attractive credit markets for our high quality Class A assets, we strengthen our balance sheet and fortify our position in the market,” Albert Behler, president & CEO of Paramount Group Inc., said in a prepared statement. Paramount relied on commercial real estate services firm Cushman & Wakefield’s Equity, Debt & Structured Finance group to serve as its exclusive advisor.

Paramount will utilize a portion of the net proceeds from the financing to repay 2017 debt maturities at the 600,000-square-foot office tower at 900 3rd Ave. in Manhattan, and the 650,000-square-foot Waterview office building just outside Washington, D.C., in Rosslyn, Va. The remaining funds will also be put to good use; they will be directed toward the $521 million acquisition of One Front Street, a 650,000-square-foot high-rise in San Francisco.

Year to date, Paramount has completed in excess of $2.3 billion of debt (at desirable rates, of course), including the half-billion-dollar refinancing of the 790,000-square-foot Manhattan office building at 31 West 52nd St. in May. In prepared remarks, company CFO Wilbur Paes said, “We have not only significantly lowered our weighted average borrowing costs and extended our debt maturities, but have also strategically laddered them to minimize future refinancing risk.”

Image courtesy of Yardi Matrix