NEW YORK: Citigroup is prepping a US$439.8m single-borrower commercial mortgage bond underpinned by a loan on 375 Park Avenue, an office building located in midtown Manhattan.
Kroll Bond Ratings considers the building to be among a handful of premiere office buildings in New York City due to its location and design. The asset, which is also known as the Seagram Building, was constructed in 1958 to serve as the 38-story world headquarters building for Joseph E. Seagram & Sons.
Located between East 52nd and East 53rd St on Park Avenue, the building was 90.2% leased to 60 tenants as of April 2013. The largest tenant is Wells Fargo, a so-called high-quality credit-worthy tenant that occupies 30.2% of the total square footage, according to a presale report released on Thursday by Kroll Bond Ratings.
Units of Citigroup and Deutsche Bank originated the loan.
The collateral is indirectly owned by the sponsor, RFR Holding, a privately-held investment firm that owns a portfolio of more than 70 office, residential, retail and lodging properties in the US and Europe.
The deal, titled CGCMT-375P, comprises eight classes of certificates, of which five classes are entitled to principal and interest, two classes are interest-only, and one class is a residual interest.
Wells Fargo occupies 237,620 square feet of office space in the building and expanded its space last year with a lease expiration of February 2021.
According to Kroll, Wells Fargo has the one-time right on November 27, 2015 to terminate its lease relating to all or a portion of its space.
Proceeds from the US$782.75m mortgage loan, along with two subordinate mezzanine loans totaling US$217.25m, were used to retire US$685m of existing debt and preferred equity, pay US$60.7m in defeasance costs, fund approximately US$20.8m of reserves, pay US$17.5m of closing costs, and return US$216m of equity to the sponsors, according to Kroll.
Also today, Barclays and Bank of America Merrill Lynch priced the US$1.387bn Freddie Mac SPC Series K-027 CMBS, backed by multifamily properties.
The 5.8-year Triple A piece priced at swaps plus 31bp, while the 9.52-year Triple A priced at swaps plus 53bp.
<Center><b><i>Copyright Reuters, 2013</b></i><br></center>
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