SL Green Realty Corp. and its Japanese partner have refinanced 245 Park Avenue with a $2.0 billion loan, the company announced Oct. 19, replacing $1.768 billion of mortgage and mezzanine debt on the Midtown Manhattan tower with a five-year, fixed-rate loan sold to bond investors.
The loan carries a 6.52% interest rate. For a building SL Green took over out of a bankruptcy four years ago, the deal shows a fully leased, renovated Park Avenue tower drawing $2.0 billion of fresh debt at that price.
The terms
According to the release, the financing was priced at 147 basis points over the U.S. Treasury index, producing the 6.52% coupon — which implies a Treasury benchmark of roughly 5.05%. SL Green said it hedged its own share of the loan to an effective rate of 6.37%.
The loan is a single-asset, single-borrower commercial mortgage-backed securities deal, a structure in which one property backs the entire bond offering rather than being pooled with dozens of others. JPMorgan Chase Bank, N.A. led the execution, with Bank of America, Deutsche Bank, Bank of Montreal, Goldman Sachs, Société Générale and Citibank participating.
The borrower is the joint venture between SL Green and a U.S. affiliate of Mori Trust Co., Ltd., the Tokyo-based developer and hotel operator.
A building that went from bankruptcy to fully leased
245 Park Avenue is a 44-story, roughly 1.8 million-square-foot tower occupying the full block between East 46th and East 47th streets, across from Grand Central Terminal. SL Green’s path to owning it was unusual. According to the company’s 2022 annual report, an affiliate of the property’s prior owner, HNA, filed for Chapter 11 protection in October 2021; SL Green, which held a preferred equity investment in the building, became the stalking-horse bidder and took full ownership in September 2022 at a gross asset valuation of $1.96 billion when no qualifying competing bids emerged.
In June 2023, SL Green sold a 49.9% interest to the Mori Trust affiliate at a gross asset valuation of $2.0 billion — Mori Trust’s first investment in New York City, the companies said at the time.
The partners then began a redevelopment with architecture firm Kohn Pedersen Fox. The release lists two new lobbies, a renovated plaza, a terra-cotta overclad on the Park Avenue façade, a fitness and wellness center and a rooftop amenity, along with an overhaul of the building’s infrastructure. Completion is expected in the first quarter of 2027.
The leasing side is finished. SL Green said in September that a 37,563-square-foot lease with Nearwater Management brought 245 Park to 100% leased. The Oct. 19 release names Société Générale, Ares Management, Houlihan Lokey, Carlyle and EQT Partners among the tenants.
What SL Green says it shows
“We set out to transform 245 Park Avenue into one of the most sought-after addresses in East Midtown, and the results speak for themselves,” said Harrison Sitomer, SL Green’s president and chief investment officer. “The building is 100% leased at significantly higher rents than under prior ownership following a robust repositioning plan, and the strength of the capital markets for high-quality New York office is evident in this financing.”
Sitomer added that the transaction “brings our $7.0 billion 2026 financing plan to near completion, generating incremental liquidity, strengthening our balance sheet and extending our debt maturities.” The release does not say how much cash the refinancing frees up after repaying the prior $1.768 billion, nor what that earlier debt cost.
Reading the deal
On our reading, the size of the new loan is the notable part. Lenders and bond buyers agreed to put $2.0 billion against a building SL Green and Mori Trust valued at $2.0 billion in 2023 — before the renovation and the lease-up. That suggests lenders now place a meaningfully higher value on the tower than its 2023 valuation, though neither the release nor any filing so far states an appraised value.
The company’s view of the Manhattan office financing market, and where the refinancing leaves its balance sheet, may get more detail when SL Green reports third-quarter results after the market closes on Oct. 21, with a conference call scheduled for Oct. 22.
More coverage of office, retail and industrial property is in RealtyWire’s commercial real estate section.
