Teachers Insurance and Annuity Association of America, College Retirement Equities Fund (TIAA- CREF) provided a $145 million loan against the Graybar Building located at New York City’s Grand Central Station.
The owner of the property, major office REIT SL Green, will use the proceeds to payoff a $108 million loan in the COMM01-J1 deal, which is set to mature in November 2010, resulting in approximately $37 million in net proceeds.
"The refinancing of the Graybar Building follows immediately on the heels of our 625 Madison Avenue refinancing announced just last week,” said Marc Holliday, chief executive officer of SL Green. “With these two transactions, featuring attractive rates of 7.5% and 7.22% respectively, we have addressed near-term maturities and generated more than $65 million of net cash proceeds, which will be utilized to further manage our near-term debt obligations. These successful efforts demonstrate that even in the worst of credit markets, well-located, well-managed commercial office buildings owned by strong landlords like SL Green are attractive to institutional lenders."
Cushman & Wakefield Sonnenblick-Goldman acted as exclusive financial advisor on the transaction.
Barclays Capital analysts said that the conservative underwriting terms imply a massive gap in proceeds as well as significant losses for more recent vintages. It was likely that only highly seasoned loans will be eligible to refinance with the net proceeds.
Nonetheless, analysts said that the data points are encouraging and expect that portfolio lending should begin to look increasingly attractive, especially given the legal risks and uncertainty regarding the CMBS structure.
“In addition, we have seen a continued thaw in the unsecured debt markets, as noted by several REIT debt raises this week including Mack-Cali, Duke Realty Corp., and Simon Property Group,” Barclays analysts said.
