Paramount Group Closes $1.3B Manhattan Refi

New financing for the 49-year-old trophy tower in the Times Square submarket was arranged by Eastdil Secured.

Paramount Group has completed a nearly $1.3 billion refinancing of Paramount Plaza, the 48-story trophy office tower at 1633 Broadway in Midtown’s Central Business District. Eastdil Secured arranged the transaction.

The 10-year, interest-only loan has a fixed rate of 2.99 percent that matures in December 2029. The company used the proceeds from the refinancing to repay the existing $1 billion loan that bore interest at a weighted average rate of 3.55 percent and was scheduled to mature in December 2022. The previous loan, according to Yardi Matrix data, was funded in 2015 by Landesbank Baden-Wurttemberg Bank, Wells Fargo Bank, DekaBank, Helaba and Voya Financial. The net proceeds realized by Paramount Group after repaying the existing loan, swap breakage and closing costs totaled roughly $179 million.

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The attractive credit markets encouraged the REIT’s decision to refinance the property, especially since the entire office portion is leased. The initiative resulted in several wins for Paramount Group: A total debt stack with a weighted average interest rate of 3.44 percent and a weighted average maturity of more than six years, a boost to the company’s debt maturity profile, as well as financial flexibility, while keeping the annual cash interest unchanged.

The 2.5 million-square-foot Paramount Plaza was designed by Emery Roth and Sons and built by the Uris brothers in 1970 on the site of the former Capitol Theatre movie palace. The asset was awarded both the Energy Star and LEED Gold certifications, and in 2012 the property was subjected to a cosmetic renovation that revamped the lobby and the 40,000-square-foot outdoor plaza. The building houses a variety of tenants including Allianz, Deloitte, Morgan Stanley, Warner Music Group, as well as Gershwin and Circle in the Square theaters.