Brookfield Corp. and Qatar Investment Authority have secured a $1.9 billion loan to refinance their 2 Manhattan West office property in Midtown.
The debt carries a 10-year term, with a 5.50 percent fixed interest rate, according to a report from S&P Global. This will repay the existing roughly $1.5 billion construction debt.
Currently, 2 Manhattan West is 96.3 percent leased to 20 tenants, with average gross office rents sitting at $132 per square foot and the average weighted remaining lease term sitting at 16, data from the report noted. Cravath, Swaine & Moore, KPMG LLP and D.E. Shaw & Co. L.P take up the biggest shares of the space in the building, at 25.7 percent and 24.5 percent and 17.5 percent of the net rentable area, respectively.
However, S&P does warn that seven tenants have the flexibility to exercise early lease terminations, which could take the average remaining lease term down on the two million square foot property to 15.1 years.
That said, the credit agency touted the building's location inside the Penn Plaza/Garment submarket, which is "significantly outperforming the broader U.S. and metro markets." Trophy availability in the submarket sits at just 5.1 percent versus the 15.2 percent national average.
"This strong performance is expected to continue given the limited new supply of premium buildings in sought-after locations," S&P said.
Along with office, 2 Manhattan West features 240,000 square feet of experiential retail. Through a joint venture, Brookfield owns 56 percent of the property, with the rest of the equity belonging to Qatar.
The announcement comes just days after another major refinancing was revealed by Soloviev Group at 9 West 57th Street, also in Midtown. The deal, worth $1.8 billion, carried an interest rate of 4.97 percent.
In the first quarter, Manhattan office activity was steady at nine million square feet, just 100,000 square feet below the total posted in the same period a year ago, according to a report from JLL. Also, vacancy dropped by 220 basis points to 13.5 percent.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.