60 Wall St. secures new mortgage at a steep price, proceeds with redevelopment

The owners of 60 Wall St. yesterday announced they refinanced the office tower’s $575 million mortgage at a substantially higher interest rate, paving the way for redevelopment of the empty building with a distinctive public lobby.“60 Wall will be redeveloped to today’s standards and will redefine the standard of redeveloped assets in the Financial District,” Albert Behler, chief executive of Paramount Group, said on a conference call today. The developer owns the building along with Singapore’s sovereign wealth fund.The $250 million project, now underway, is a big bet that tenants will lease space downtown even though there are plenty of options nearby. Vacancy rates in the Financial District are 27.6%, according to Colliers, and newly freed-up office space at 55 Water St., 14 Wall St. and 180 Maiden Lane have contributed to the tumbleweeds vibe of the neighborhood.Those risks explain why the new mortgage for 60 Wall St. comes with an elevated interest rate.A $259 million slice of the five-year mortgage carries a 12% interest rate and is a payment-in-kind loan, meaning if the landlords choose not to make a monthly payment then the unpaid obligation is added to the balance of the loan. PIKs are risky because they allow borrowers to add more debt to their balance sheets and avoid paying their interest obligations in the short term.Another $316 million piece of the $575 million loan has a floating interest rate of 7.8%, the same as the mortgage Paramount and its partner... Continue reading at 'Crains New York'

[ Crains New York | 2024-05-02 17:53:38 UTC ]

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