Key facts
- Rithm Capital secured a $415 million CMBS loan and $85 million in mezzanine debt for a Midtown Manhattan office tower.
- The financing for 31 W. 52nd St. has a fixed 6.85% interest rate and matures in December 2029.
- Rithm's subsidiary, Elecor Properties, contributed $72.5 million in equity to the deal.
- The new loan replaces a prior $500 million mortgage on the property.
- Rithm plans to allocate $42.9 million for tenant improvements and leasing commissions.
- The building is currently 86.5% occupied, but a significant portion of leases expire in 2030.
Rithm Capital Corp. has arranged a new $415 million CMBS loan and $85 million in mezzanine debt to refinance a 29-story office skyscraper located at 31 W. 52nd St. in Midtown Manhattan. This transaction follows Rithm's acquisition of Paramount Group last year for $1.6 billion, through which it assumed ownership of the building.
Elecor Properties, Rithm's rebranded office subsidiary, provided $72.5 million in equity to finalize the new financing. The loan carries a fixed interest rate of 6.85% and is set to mature in December 2029, replacing a previous $500 million loan. Wells Fargo Bank, Bank of America, Barclays, Citi Real Estate Funding, and Goldman Sachs Bank were the originators of the new mortgage.
Rithm Capital plans to allocate $42.9 million from the financing towards a reserve fund for leasing commissions and property improvements, aimed at attracting new tenants and retaining existing ones. The deal is anticipated to close on July 15, according to Fitch Ratings.
The building is currently 86.5% leased. However, approximately 41% of its leases are scheduled to expire in 2030, representing $19.2 million in base rent. Tenants currently pay an average of $81 per square foot, while asking rents in the surrounding Class-A market are around $108 per square foot. Among the tenants with expiring leases are law firm Pillsbury Winthrop Shaw Pittman and financial planner Centerview Partners, who together account for nearly 34% of the building's rent roll and hold five-year extension options.
Fitch analysts noted that the building's prime Plaza District location and quality, combined with a general slowdown in Manhattan office development, are positive factors supporting occupancy and rent levels for high-quality assets. This refinancing marks the second significant transaction for Rithm since its acquisition of Paramount Group, following a $283 million refinancing of 1325 Sixth Ave. in April. The move occurs amidst a notable recovery in Manhattan's office market, with lease signings reaching their highest first-half total since 2002.