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CMA
February 22, 2019  

Mortgage Eyed on Revamped SoHo Offices

A Stellar Management partnership is seeking a $700 million mortgage on a recently redeveloped office complex on the western edge of Manhattan’s SoHo neighborhood.

Stellar and its partner, Imperium Capital, are taking quotes on a five-year debt package, with either a fixed or floating interest rate, on the roughly 800,000-square-foot One SoHo Square. Cushman & Wakefield is advising the duo.

The property encompasses two buildings, at 233 Spring Street and 161 Sixth Avenue, that are connected by a new glass-enclosed structure.

Stellar and Imperium, both of New York, teamed up with Boston-based Rockpoint Group to buy the two pre-war buildings in 2012 for $200 million from an investor group that included several wealthy individuals.

The partnership then embarked on a $50 million renovation that connected the buildings and added about 50,000 sf, mostly in three penthouse floors atop 233 Spring Street. That building, dubbed One SoHo West, now has 13 stories. The other, One SoHo East, has 15. The connecting structure is 19 stories tall and contains building systems and elevators. The redevelopment also created a joint lobby and a roof deck, plus improved interiors.

In 2016, Stellar bought out Rockpoint’s 20% stake in a recapitalization that valued the property at about $630 million.

Last fall, Stellar and Imperium put the complex on the block, anticipating it could fetch $1.2 billion, but no sale materialized. Around the same time, they began talks about refinancing.

Meanwhile, the owners negotiated the buyout of a large, long-term lease. Springer Science had occupied some 111,000 sf at rents described as one-fifth the current market average. The move is expected to allow the Stellar team to fill the space at a higher rate and boost cashflow. As a result, the partners have revised their initial loan request and are now seeking slightly higher proceeds.

The complex was about 86% leased as of October. Tenants include Flatiron Health (132,000 sf until 2029), Aetna (106,000 sf until 2029), Estee Lauder’s MAC Cosmetics (89,000 sf until 2034) and Warby Parker (82,000 sf until 2025). The street-level retail space is occupied by Trader Joe’s and other stores.