Manhattan, NY NKF Capital Markets, serving as the exclusive advisor to Orda Management Corp. (Orda), has closed $430 million in debt financing on 225-233 Park Ave. South. Jordan Roeschlaub led the NKF Capital Markets team, which also included Steven Sperandio and Daniel Fromm, that brokered and structured the financing of the trophy asset.
The loan was structured as a ten-year, fixed-rate loan that is fully interest-only. Barclays provided the $430 million loan that replaced a $217 million loan from New York State Teachers’ Retirement System (NYSTRS). The funding allowed ownership to successfully recapture equity that was spent on the recent capital investment. Over the past 18 months, approximately $135 million was spent on an extensive capital improvement plan, which repositioned the building as the premier asset on Park Avenue South.
“I’ve spent the better part of three decades redeveloping and repositioning our two office buildings, and each transition has been remarkable; this one is the pinnacle. We are thrilled at what we’ve accomplished with the asset’s repositioning and ultimately its refinancing, and are extremely proud of our 225 team members and our tenants,” said Orda chairman Morton Silver.
The 675,000 s/f, class A property, which features two contiguous buildings located in close proximity to Union Sq., Gramercy Park, and Madison Sq. Park, was built in 1909 and is the top office asset on Park Ave. South. It is currently nearly 100% leased, with the only exception being a new, 580 s/f space on Park Ave. South that connects to 8,000 s/f in the windowed lower level. The property boasts a unique history – after 9/11 in 2001, the Port Authority of New York and New Jersey immediately needed a new space, since they were previously located in the World Trade Center. A space was fitted out for them at the top of the building so they could move right in, and when they committed to moving to 4 World Trade Center in 2015, it opened the door for a complete repositioning of the asset. As a result, the buildings now feature a lengthy list of amenities, including three stylized lobbies; a 13th floor rooftop garden and adjacent glass pavilion; a 14th floor garden terrace; a 19th floor, 4,000 s/f, glass-enclosed courtyard; new mechanical systems; new elevators; and a large loading dock.
The capital improvement plan began with the gutting of the lobby and the addition of a brand-new, stone floor. The plan was also centered around creating green, outdoor spaces. While many of the buildings in the area, including this one, were simply painted over, the repositioning of the property involved taking the paint down to the limestone to restore the classic architectural look. The “industrial” atmosphere was enhanced by using intumescent coating on stripped, steel columns on the interior floors so the bolts on the columns are still visible, adding to the effect. The aforementioned roof garden encompasses a 9,000 s/f roof with a 3,000 s/f pavilion, which also added square footage to the building.
As the buildings climb higher towards the sky, the difference in floor heights is magnified – while the first few floors are similar in height, the higher floors vary – at 233 (the shorter, 12-story building), a “light court” was built, with a connection to 225 (the taller, 19-story structure). Facing east is a splendid glass wall, and the connection allows for true, usable s/f in the middle of the floorplate – supporting 27,000 and 40,000 s/f floorplates in each building respectively. In 1982, Silver had the foresight to begin commissioning more full-floor tenants at the building, which allowed it to grow into a larger opportunity for higher-quality tenants. The tenant roster now includes top-tier organizations such as Facebook, BuzzFeed, T. Rowe Price and STV Engineering.
Another truly unique aspect of the property is the fact that each tenant essentially has their own elevator bank. One major technology firm, for example, enjoys a “building within a building,” with private elevator and lobby spaces. The property stands in such a location that allows for spectacular vistas and nearly 360 degrees of views which include Union Square, Gramercy Park, the Chrysler Building, the Brooklyn Bridge, the World Trade Center and more. The creation of a new cooling tower on the upper roof allowed for the creation of a courtyard on the 19th floor, which is a private space with the new, 4,000-square-foot courtyard surrounded by interior space (essentially 24,000 square feet of pavilion space). Additionally, the buildings’ proximity to Union Square makes it the perfect opportunity for technology-focused tenants, which benefit from the tech-centric hub featuring top talent. There is also a new restaurant being built in the corner across from the Union Square Café, which will be designed by David Rockwell.
“This class A property’s premier location on Park Avenue South, coupled with the extensive capital improvements and top-tier tenancy, allowed Orda to take full advantage of the debt markets,” said Roeschlaub.
We are pleased NKF Capital Markets and Barclays were able to structure a very accretive debt facility that recognized the upgraded asset’s profile,” added Orda President Tommy Silver.