Citigroup, German American Capital Corp. and Wells Fargo are marketing $765 million in commercial mortgage bonds associated with the mortgage the three originated for lower Manhattan’s 225 Liberty Street skyscraper.
The bonds, backed by the leasehold interests of its Class A office and upscale retail tenants, are to be issued by the 225 Liberty Street Trust 2015-225L, the first-ever securitization put together on the 2.4-million square foot property (the former Merrill Lynch headquarters building at Two World Financial Center – by the limited partnership ownership group (WFP Tower B Co. L.P.).
The notes being sold are collateralized by a $765 million trust loan (with an interest rate of 4.657%) and three companion loans totaling $135 million that are part of the $900 million whole mortgage loan structure sponsored by Brookfield Property Partners.
The 44-story Liberty Street tower, which is part of the Brookfield Place office complex, is home to 13 tenants including Time Inc., Hudson’s Bay Co., BNY Mellon and other national corporate and store occupants. The tower is welcoming new anchor Saks Fifth Avenue in a location that opens this summer.
Both Standard & Poor’s and DRBS issued preliminary ratings on the seven classes of notes of notes, including a ‘AAA’ on the $281.9 million in Class A notes atop the capital stack. A $381.7 million Class X tranche of interest-only notes are also rated ‘AAA’, while a $42.1 million Class B stack has received ‘AA’ ratings and $57.8 million in Class C notes received an ‘A’ rating.
Only S&P is rating the lower tranches: $171.7 million of Class D notes, ‘BBB-’; $120 million in Class E notes, ‘BB-’; and $91.5 million in a Class F tranche, ‘B-’.
The mortgage loan sellers are retaining $135 million in pari passu non-trust companion loans: a $117.45 million pari pasu to Class A and $17.55 million to Class B, according to presale reports.
DRBS calls the 225 Liberty Tower, across from the World Trade Center site on the Hudson River, a “trophy, Class A” office property that is benefitting from $71.6 million in recent renovations and a lower-than-average vacancy (93.5%) than comparable Class A office space (13.4%) in Manhattan.
The owners have $153.6 million in leasing obligations ahead: $80.8 million in free rent to some of the tenants – most notably Time, its largest tenant holding 673,260 square feet on seven lower floors, will be enjoying $66.3 million in free rent through December 2017 at the tower that is marketing rental space at $60- to $75-per-square foot.
Other large tenants include Bank of America, which occupies 318,665 square feet or 13.1% of the property and Commerzbank’s 129,363 square-foot space.
