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CMA
May 17, 2019  

Goldman Nabs Loan on New SoHo Offices

Goldman Sachs has agreed to provide a Stellar Management partnership with $900 million of floating-rate debt on the recently redeveloped One SoHo Square office complex in Manhattan.

Goldman plans to securitize the $730 million senior portion via a stand-alone offering (GSMS 2019-SOHO). The rest will be structured as mezzanine debt and placed with high-yield investors.

Stellar, an investment firm led by Larry Gluck, and its partner, Imperium Capital, will use some of the proceeds to refinance $264.3 million of existing debt. Cushman & Wakefield is their advisor.

Goldman’s interest-only loan will have a two-year term and three one-year extension options. The loan-to-value ratio is 66.7%, based on the 792,000-square-foot complex’s appraised value of $1.35 billion, or $1,705/sf.

The property’s two buildings, at 233 Spring Street and 161 Sixth Avenue on the western edge of the SoHo neighborhood, were connected by a glass-enclosed structure as part of the redevelopment. The occupancy rate is 89%. Investment-grade tenants occupy 57.1% of the space and account for 65.8% of rental income.

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

The partnership then embarked on a $268 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, currently has 13 stories. The other, One SoHo East, has 15. As part of the project, all building systems and elevators were moved to a new, 19-story central tower. A roof deck and a joint lobby facing Spring Street Park were also added.

In 2016, Stellar bought Rockpoint’s 20% stake in a recapitalization that valued the property at $630 million. Stellar and Imperium put the complex on the block last fall, but no sale materialized and they decided early this year to pursue refinancing.

The complex includes 703,000 sf of offices. Flatiron Health occupies 223,000 sf under a lease that expires in 2031. The other major office tenants are Aetna (106,000 sf until 2029), Estee Lauder’s MAC Cosmetics (89,000 sf until 2034) and Warby Parker (82,000 sf until 2025). There is 39,000 sf of ground-floor retail space whose tenants include Trader Joe’s, CVS and Torch & Crown Brewery.