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CMA
December 20, 2019  

UBS Team Aiming to Refinance 120 Broadway

A UBS Realty partnership is seeking to borrow $510 million to refinance and upgrade the landmark office building at 120 Broadway in Lower Manhattan.

UBS and its partner, developer Larry Silverstein, own the leasehold interest in the 1.9 million-square-foot property. They are looking for a floating-rate loan with a total term of five years. Some $410 million of the balance would be funded upfront, with the remaining portion drawn down over time to cover renovation and leasing costs. Cushman & Wakefield is pitching the assignment.

The UBS team would use most of the initial proceeds to retire a $310 million fixed-rate mortgage that they obtained in 2013. Wells Fargo securitized the low-leverage loan via a stand-alone offering (WFCM 2013-120B). That seven-year mortgage, with a 2.72% coupon, becomes eligible for prepayment this month.

The building, which sits between Cedar and Pine Streets, one block north of Wall Street, was constructed in 1915 as the headquarters of Equitable Life. The box-like structure — 41 stories high with no setbacks on the higher floors — was so massive relative to the site that it prompted the enactment of the nation’s first comprehensive zoning law the following year. The property was listed on the National Register of Historic Places in 1978.

Silverstein acquired the building in 1980. He surrendered it to a lender during the downturn in the late 1980s, but bought it back in 1999 with partners. In 2011, UBS bought a 65% interest from California State Teachers via its Trumbull Property Fund, with Silverstein retaining the other 35%. That transaction valued the property at $525 million.

UBS and Silverstein have spent more than $60 million on renovations over the past 15 years. The work has included upgrades to the building’s systems and technology, the elevators, the windows and the facade.

The occupancy rate was 75% as of June, according to the latest loan-servicer report. Net operating income was $10.7 million in the first half. That was $21.5 million on an annualized basis, down from $33.2 million in full-year 2018.

The underlying ground is leased from the Estate of Sarah Korein. The ground lease, arranged in 1955, requires a fixed annual rent of only $850,000. There are options to extend the lease for more than 900 years.