HGI’s purchase marks the first sale of the landmark office tower since its construction. It has served as CBS’ headquarters since 1964. ViacomCBS announced in August that it would sell the 38-story asset to HGI for $760 million, after which HGI said it had big plans for a major renovation of the Eero Saarinen-designed tower, which was erected in the early 1960s. As part of the deal, ViacomCBS will continue to lease its 817,000-square-foot space on 11 floors in the building on a short-term basis. Another significant tenant is law firm Wachtell, Lipton, Rosen & Katz, which has 250,000 square feet of space.
The CMBS deal will have a single-asset, single-borrower (SASB) execution, the sources said. Deutsche Bank led the six-year, floating-rate transaction, with Goldman Sachs and Brookfield Real Estate Finance also participating. The capital stack includes a $420 million senior mortgage from Deutsche Bank and Goldman, with Brookfield in the $138 million mezzanine position.
CBRE’s James Millon, Tom Traynor and P.J. Finley arranged the financing, per an offering memorandum shared with CO at the time debt proposals were being sourced. The deal closed on Wednesday.
Officials at Deutsche Bank and Brookfield didn’t immediately respond to requests for comment. HGI officials weren’t immediately available for comment. Goldman Sachs and CBRE officials declined to comment. Cathy Cunningham can be reached at email@example.com. “We look forward to activating our strategic business plan for this asset at a transformational time for New York City’s office market,” Richard Litton, president of HGI, said in an announcement at the time of the firm’s purchase.
Sources confirmed that while loan proceeds will be used for the acquisition, a significant portion of the debt will be used to re-tenant rollover in the building, and for capital improvements. At the time of the acquisition, HGI said it had plans to undertake a “significant capital program to reposition the property in support of a long-term leasing plan. Updates will include significant upgrades to the lobby and other tenant amenities.”
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