LOS ANGELES-Thomas Properties Group Inc. has arranged a new $350 million mortgage on the publicly held company's 2.6-million-square-foot City National Plaza office and retail development at Fifth and Flower streets in the central business district. Thomas Properties, which owns the full-block project in a joint venture with the California State Teachers’ Retirement System, reports that the new non-recourse first mortgage was made jointly by Metropolitan Life Insurance Co. and the New York State Teachers’ Retirement System. The loan bears interest at a fixed rate of 5.9% and is for a term of 10 years, to mature in July 2020.

The new mortgage loan refinances the previous first mortgage loan of $348.9 million that was scheduled to mature on July 9 this year. The previous mezzanine loans totaling approximately $219.1 million, which were also scheduled to mature on July 9, were purchased by an affiliate of CalSTRS in March.

Concurrent with the closing of the new loan, the mezzanine loans were retired and converted into additional equity in City National Plaza through CalSTRS’ interest in TPG/CalSTRS. As a result of the conversion, the CalSTRS interest in City National Plaza was increased from 75% to approximately 92%. Thomas and CalSRS are negotiating with regard to a right by Thomas to increase its ownership interest in City National Plaza to its original 25%.

John Sischo, co-COO of Thomas, describes the refinancing as“indicative of a recovering debt capital market that is seeking to finance high-quality assets with well capitalized sponsors at low loan-to-value.”

City National Plaza consists of two 52-story office towers, a three-story central plaza level building and four subterranean levels situated on a 4.2-acre block that was completed in 1972 as the world headquarters for Atlantic Richfield Corp. Designed by Los Angeles architect Albert C. Martin Associates, the project was one of the first major business centers in the heart of the financial district.