The Seagram Building has many fewer vacancies than a year ago, a welcome development for landlord RFR Holding and one that underscores the rising gap in fortunes for Park Avenue towers over the rest of Midtown.
The landmarked building at 375 Park Ave. is 98% occupied, up from 90% a year ago, according to a report from Wednesday by bond-rating firm KBRA. The increase is owed in part to Blue Owl Capital expanding its footprint to 155,000 square feet from 100,000, at a base rent of about $148 per square foot.
The Seagram’s second-largest tenant, private equity firm Clayton Dubilier & Rice, expanded its footprint by about 10,000 square feet and now leases 69,000 square feet at $153 a square foot. A new tenant this year, investment firm Advent International, moved into 34,000 square feet at $193 per square foot, KBRA said. These rents are well-above the avenue’s asking rate of $110 per square foot, according to Savills.
Those leases are welcome news for RFR’s Aby Rosen and Michael Fuchs, who acquired the Seagram at East 52nd Street in 2000 for $375 million from TIAA. RFR invested millions in upgrading the 38-story, 860,000 square-foot tower developed in 1958 and designed by architects including Ludwig Mies van der Rohe. The Seagram was the first building with floor-to-ceiling windows, and its look has been imitated by high-rises everywhere. It was added to the National Register of Historic Places in 2006.
But the Seagram has big bills coming due. Its $760-million mortgage matures next year and, after being extended twice, could be difficult to refinance next year considering it carries just a 3.53% interest rate. The building also carries an additional $217 million in mezzanine debt.
RFR’s portfolio has some challenges. It owns 50% of the Chrysler Building with an insolvent Austrian firm called Signa. And 90 Fifth Ave., a handsome office tower at West 14th St. riddled with vacancies that missed a property-tax payment last year. The bill has since been paid.
Against such difficulties, common among older office buildings across Manhattan, the Seagram’s rising fortunes stand out. Rental income at the tower has risen to $72 million from $66 million 12 months ago, KBRA said, thanks to the new tenants paying high rents.
“The changes increase the likelihood that the borrower will be able to refinance at its next maturity date,” KBRA said, “which it failed to do at its original maturity date.”
An RFR representative said the Seagram Building is 99% leased with $85 million in net operating income and valued at $2.3 billion.
Aaron Elstein , 2024-05-23 21:07:37
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