Former Bear Stearns HQ Included in $500M Single-Borrower CMBS
The former Bear Stearns headquarters building at 245 Park Avenue, a long-time home to cornerstone financial services tenants as well as Major League Baseball, is the sole property backing a new single-borrower $500 million commercial mortgage securitization.
The 245 Park Avenue Trust 2017-245P is being secured by portion of a $1.02 billion mortgage issued to a Chinese conglomerate, HNA Group. HNA was the lead on a consortium that acquired the 1.72-million square foot, Class A office tower for $2.2 billion in March.
The billion-dollar loan was co-originated and sold off by JPMorgan, Natixis Real Estate Capital, Barclays, Deutsche Bank and Société Générale.
The 48-story building is 91% occupied, and currently includes the commissioner's office of Major League Baseball and legacy Bear Stearns office space now occupied by JPMorgan.
Both MLB and JPMorgan - the two largest tenants by base rent and square footage -have leases that run through 2022, with neither planning to renew (MLB has already announced plans to vacate early in 2019 to move into the Rockefeller Center on the West Side).
But existing sublease clients of both tenants (including Société Générale) are slated to sign their own direct leases after the departures, and HNA itself plans to establish North American headquarters in some of the existing MLB space.
Fitch and KBRA have assigned triple-A ratings to the Class A senior notes totaling $260 million.
The trust collateral consists of five pari passu Class A notes totaling $380 million and five subordinate B notes totaling $120 million, according to presale reports. The remaining $700 million of the whole mortgage loan costs of 14 pari passu Class A notes that will be included in a future securitization.
The 254 Park Avenue office tower is in the Grand Central office submarket bound by Park Avenue and Lexington Avenue, between 47th and 48th Streets.
MLB, the second-largest tenant, accounts for 21.8% of base rent and has previously announced plans to move out of its 220,565-square foot space in 2019 so it can consolidate its league and MLB Advanced Media operations at 1271 Avenue of the Americas, which will include the former Time Inc. headquarters space.
Even with the potential loss of MLB, 245 Park Avenue's two remaining direct-lease tenants - JPMorgan and Rabobank Nederland - that account for more than 51% of the occupied space in the tower. More than 80% of the occupied square footage in the building is taken up by financial services tenants, including Angelo Gordon & Co. and Ares Capital Corp.
JPMorgan leases over 787,000 square feet in the building, much of it legacy space from its 2008 takeover of Bear Stearns. The bank is not expected to renew its lease in 2022, but subleases 562,347 square feet of that space to Société Générale and has already signed a 10-year direct lease that commences after its sublease expires.