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Related Cos., partners gaining $1.1B in cash-out equity via CMBS

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The developers of one of the newest office towers on the Far West Side area of Manhattan are getting back most of the building’s $1.3 billion construction cost through a partially securitized commercial mortgage loan.

According to presale reports, affiliates of The Related Cos., OP Olympic Capital and Mitsui Fudosan America are taking out cash equity of $1.1 billion through a new $1.245 billion, interest-only loan taken out and secured by a 51-story office story the firms constructed at 55 Hudson Yards.

The building is unencumbered by any prior debt, meaning the joint venture will pocket most of the proceeds of the loan, minus funds reserved for tenant improvements, leasing commissions, closing costs and taxes.

55 Hudson Yards is the latest of an estimated $25 billion in developments in the Hudson Yard section of Manhattan by the Related Cos., headed by founder and billionaire New York developer Stephen M. Ross, according to Moody's Investors Service.

Olympic Capital is the real estate arm of Canada pension fund OMERS while Mitsui is the U.S. subsidiary of the largest real estate company in Japan.

The Class A office tower, which Moody’s Investors Service calls a major addition to the West Side submarket in New York, has inked major tenants to long-term leases such as private hedge fund giant Point 72 and international law firms Milbank, Tweed, Hadley & McCloy and Cooley LLP.

“The building’s superior amenities package, excellent natural light, expansive views of the Hudson River, LEED Gold technology, and prime location make the subject one of the premier office buildings in Manhattan,” according to a presale report from Moody's.

The Far West Side Manhattan area is one of the fastest-rising development submarkets in New York, with an additional 11.7 million square feet of office place under construction that will build up a “substantial amount” of office inventory in the years to come, reported Moody’s.

Most of the loan is being securitized through the $810.5 million large-loan CMBS transaction, Hudson Yards 2019-55HY Mortgage Trust. The senior notes in the transaction, including $357.4 million in Class A notes, have preliminary triple-A ratings from Moody’s and Kroll Bond Rating Agency.

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