Seagram Building Serves Up $1B Refi

NEW YORK CITY-The ownership of the iconic Seagram Building at 375 Park Ave. is obtaining a loan of nearly $1 billion to refinance the property, according to published reports. Following up on a Commercial Mortgage Alert story that appeared this past Friday, Crain's New York Business on Thursday reported that Citibank and Deutsche Bank were providing RFR Realty with the refi, part of which would be used to defease $290.6 million of CMBS debt on the 38-story office tower. A spokeswoman for Deutsche Bank declines comment.

The two banks plan to securitize portions of the loan with the Seagram Building as the sole collateral, according to Crain's. Trepp reported earlier this week that the current CMBS debt on 375 Park represents the largest slice of CSFB 2005-C5, at 12.1% of the collateral.

When that 2005 CMBS deal was issued, the 817,000-square-foot tower was appraised at $705 million, according to Trepp. In mid-2011, RFR sought to sell a 49% stake in 375 Park for at least $2,000 per square foot, pricing that would have valued the property at closer to $2 billion, Crain's reported. RFR paid $371 million in 2000 to buy the tower from TIAA-CREF, according to CMA.

The sale of a stake in 375 Park never happened, sharing a similar fate to the planned sales of Worldwide Plaza and 1211 Ave. of the Americas during the same time period. Instead, RFR took out more than $160 million of mezzanine debt to buy out the property's minority owners, Crain's reported.

Given that current lending levels are generally capped at about 70% of a property's value, the refi would appear to value 375 Park at well below RFR's circa-'11 asking price, reported Crain's. A prospectus from Citibank and Deutsche Bank will offer a current valuation when the banks issue the mortgage-backed debt later this year, published reports say. A source familiar with the deal confirms the accuracy of both accounts.