05/21/2010

Lenders Chase Big Loan on NY Office Tower

A partnership between insurer AXA Equitable and J.P. Morgan Investment Management is seeking a loan of up to $375 million on the office building at 1285 Avenue of the Americas in Midtown Manhattan.

The duo wants a fixed-rate loan with a 10-year term, lenders said. The balance would equal less than half of the property's value. The low leverage and the fact that the 1.6 million-square-foot tower is fully leased make the assignment especially attractive for lenders.

"Term sheets are flying on this one," said one veteran lender. "It's a hot deal. It's going to be very competitive."

The buzz is that insurance companies and banks will likely trump commercial MBS lenders. CMBS shops would have a hard time competing with the prepayment and interest-only terms that portfolio lenders can offer, market players said.

Holliday Fenoglio Fowler is shopping the assignment for the AXA partnership. It had asked for proposals on a loan of $325 million to $375 million, but lenders expect the balance to end up at the high end of that range.

The existing loan, which has paid down to $305.2 million from its original balance of $372.3 million, doesn't mature until August 2011. But with lenders competing aggressively for low-leverage loans on well-leased properties, borrowers are motivated to shop for refinancing early to get the best possible terms.

The tower stretches from West 51st Street to West 52nd Street on the west side of Sixth Avenue, about a block from Rockefeller Center. It was developed in 1961 as the headquarters of Equitable Life, the predecessor of AXA Equitable.

The tenants are UBS, law firm Paul, Weiss and advertising agency B.B.D.O. International. Paul, Weiss renewed its lease in December for 15 years. The firm occupies 19 of the building's 42 floors.

Goldman Sachs wrote the existing loan in 2001 and securitized it via a single-asset offering (GS Mortgage Securities Corp. II, 2001-1285). The 6.79% loan financed the $500 million acquisition of the property by J.P. Morgan and Equitable Life from a Nippon Life partnership.

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