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CMA
January 31, 2020  

Sotheby's Taking Bids on Floater for NY HQ

Sotheby’s is seeking a $650 million mortgage on its Manhattan headquarters.

The auction house is asking for quotes on floating-rate debt that would run a total of five years. Newmark is advising it on the refinancing. The collateral is a 506,000-square-foot building at 1334 York Avenue, where the company has been based for some 40 years.

A new loan would retire existing debt that totals about $450 million. That includes a $252 million mortgage originated last October by BNP Paribas. The structure and holder of the additional debt isn’t known.

Sotheby’s, previously a public company, was taken private in an October deal that valued it at $3.7 billion. The buyer was BidFair USA, an entity controlled by French-Israeli telecommunications entrepreneur Patrick Drahi.

The Upper East Side building, constructed in 1921, has been extensively renovated several times. Most notably, in 2000 Sotheby’s spent about $150 million to expand it from four to 10 floors and make other improvements.

The firm sold the property in late 2002 to New York-based RFR Holding for $175 million and leased back all of the space. A few months later, RFR sold a 90% interest to German fund operator Sachsenfonds. Sotheby’s reacquired the property in 2009 for $370 million. It flirted with another sale-leaseback transaction a few years later, but no deal resulted.

In 2015, HSBC and Industrial and Commercial Bank of China originated a seven-year, $325 million mortgage on the property and syndicated portions to other lenders. That loan agreement was amended at least once, in 2017, before being replaced by last year’s debt package.

The granite- and glass-sheathed building stretches along York Avenue from East 71st to East 72nd Street, one block from the FDR Drive. It contains auction and showroom space, as well as the company’s offices. There’s also a small street-level retail component.

The surrounding neighborhood has a concentration of healthcare buildings, including New York-Presbyterian/Weill Cornell Medical Center one block to the south.