The Durst Organization has struck a deal to refinance its Times Square mixed-use office trophy property, One Five One.
Financial institutions Wells Fargo Bank, JP Morgan Chase Bank and Bank of America are originating a $1.3 billion commercial mortgage-backed security loan, which bears a 6.1 percent interest rate, according to a presale report posted by S&P Global.
The new loan will replace the about $1.07 billion in existing debt on the 1.8 million square foot property. Another big portion ($50 million) will be put in a reserve fund to cover re-tenanting costs in case One Five's largest tenant, TikTok, defaults on its lease, according to S&P. Due to a recent law, the short video platform's Beijing-based parent company, ByteDance Ltd., will soon need to divest its American business or face a ban in the U.S.
"The largest tenant, TikTok, (12.8% by sq. ft.; 15.2% of gross rent) may be adversely affected," S&P warned.
Some other large tenants at One Five include H&M, Nasdaq, BMO Capital Markets and Venable LLP. The top five largest firms occupy nearly 840,000 square feet at the property, which is currently 92.3 percent leased in total.
The 48-story trophy asset, located between 42nd and 43rd streets in Manhattan, features 72,527 square feet of retail space on the ground level. Over 75 percent of the gross income generated at One Five comes from office, while retail accounts for 11.5 percent, according to S&P. The building was originally built in 1999 and underwent a $150 million renovation in 2017, which added a new entrance and lobby, architectural improvements and energy-efficient systems.
While One Five benefits from the vibrant Times Square market, which commands the second-highest office rents and mix of retail, S&P does caution that the submarket's office vacancies are elevated at 15.7 percent. That's above the 15.7 percent national average.
As a result of the refinancing, Durst expects to land roughly $146.1 million in returns. The deal is expected to close on or around August 19, with the new loan's maturity set for August 2030.
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