Morgan Stanley is securitizing the senior portion of a $300 million loan secured by the Graybar Building located on 420 Lexington Ave in New York City.
MSCI 2015-420 will sell a total of $245 million of notes. Kroll Bond Rating Agency assigned preliminary AAA’ ratings to $148 million of class A ratings. The subordinate tranches will not be rated.
The loan originated by Morgan Stanley Bank, N.A. on September 24, 2014, has an anticipated repayment date (ARD) of 10 years, with a 26-year legal maturity.
SL Green Operating Partnership (an affiliate of SL Green Realty Corp.), the loan sponsor, used proceed from the $300.0 million mortgage to retire $205.1 million of financing provided by Teachers Insurance and Annuity Association of America, pay $4.5 million of closing costs, and return approximately $90.4 million to the sponsor. The asset was previously securitized in the COMM 2001-J1A transaction.
The Graybar Building, built in 1927, has of 1.4 million square feet of office space, 49,692 square feet of retail space, and 16,024 square feet used for storage and the management office. As of December 2014, the property was 97.0% leased to approximately 200 tenants. However, one of the tenants, Brixmor (New Plan Excel Realty), which represents 3.6% of the total square footage and 2.8% of the base rent, exercised a termination option and will vacate its space in September 2015. Excluding Brixmor, the property’s occupancy is 93.4%. Current annual ground rent on the building is calculated at $11.2 million, according to the Kroll presale report.
The largest tenants at the property include Metropolitan Transportation Authority/Metro-North, SL Green Management, an affiliate of the sponsor, and New York Life Insurance. Together, these three tenants account for 28.2% of total base rent.