09/14/2012

CIBC, Natixis Finance Lord & Taylor Flagship

CIBC and Natixis last week originated a $250 million floating-rate mortgage on the flagship Lord & Taylor store on Fifth Avenue in Midtown Manhattan.

The two banks, which evenly divided the five-year mortgage, plan to syndicate an unspecified portion. They are serving as co-leads on the loan, with CIBC as the administrative agent.

The loan-to-value ratio is just 45%, putting the 658,000-square-foot property’s value at $555 million. The borrower is private equity shop NRDC Equity Partners, the parent of the Lord & Taylor department-store chain.

The 11-story building is at 424 Fifth Avenue, between West 38th and West 39th Streets. It was constructed in 1914 and underwent a $25 million renovation last year. Lord & Taylor uses the lower four floors and basement as its flagship store and the upper floors as its corporate headquarters.

NRDC is a joint venture between two pairs of investors: Robert Baker and Richard Baker, principals of National Realty & Development of Purchase, N.Y.; and William Mack and Lee Neibert, partners of AREA Property Partners of New York.

NRDC bought the department-store chain in 2006 from Federated Department Stores for $1.2 billion. That takeover was financed with a $1 billion floating-rate financing package provided by Bear Stearns and Lehman Brothers. The debt was backed by 424 Fifth Avenue, 35 other stores and a distribution center.

The senior $782 million portion was securitized via a $2.6 billion pooled offering (Merrill Lynch Floating Trust, 2006-1). Senior mezzanine debt totaling $160 million was placed with Five Mile Capital, Hypo Real Estate, Fortress Investment and iStar Financial. A $65 million junior mezzanine piece was placed with Guggenheim Structured Real Estate.

NRDC paid off the outstanding debt on Jan. 11.

Within the past week, news trickled out that the NRDC entity that controls Lord & Taylor is preparing for an IPO. That entity, Hudson’s Bay Co., is also the parent of The Bay, one of the largest department-store chains in Canada. NRDC acquired The Bay in 2008 and then put Lord & Taylor under the same umbrella.

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