The mortgage for the 44-story, 1.8-million-square-foot tower at 245 Park Ave. is a “loan of concern” because two high-paying tenants could soon leave for other first-class office buildings in Midtown, a ratings firm said yesterday.
SL Green acquired the building near Grand Central Terminal in 2022 from the bankrupt Chinese conglomerate HNA. The developer sold a 50% stake in the building last year to Japan’s Mori Trust for $1 billion and is using the proceeds to help renovate the lobbies, elevators, outdoor plaza, plus install a new golf lounge and rooftop restaurant.
That work is being done to keep tenants such as investment firm Ares Management, the building’s second-largest, whose lease for 210,000 square feet of space expires in two years. The lease for Dutch lender Rabobank, the fourth-largest with 110,000 square feet, also expires in two years. Together the companies lease 18% of the building’s space and pay about 30% of the rent, KBRA said in a report Thursday.
It’s never been more vital for landlords to hang onto top-paying tenants as demand for office space continues to weaken. Another major Manhattan office owner, Vornado Realty Trust CEO Steven Roth, drove that point home this week when he talked about Bloomberg LP agreeing to extend a massive 950,000 square-foot lease in his building at 731 Lexington Ave.
“Every developer in town tried to poach Bloomberg,” he said on a conference call. “And of course, they looked at every opportunity.”
Thanks to investment firms Stonepeak Partners and EQT Partners each signing on for nearly 80,000 square feet last year, 245 Park Ave was 81% leased at the end of 2023. That was higher than 73% a year earlier but lower than the pre-pandemic 91%, KBRA said. Its biggest tenant, Paris-based financial institution Societe Generale, leases 500,000 square feet through 2032.
245 Park carries $1.8 billion in mortgage and other debt. The mortgage carries a 3.7% interest rate and matures in 2027.
SL Green had no immediate comment.
Aaron Elstein , 2024-05-10 12:03:03
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