Paramount Refis Manhattan Landmark for $860M

1301 Avenue of the Americas. Image via Google Street View

Paramount Group Inc. has completed an $860 million refinancing of 1301 Avenue of the Americas, a 1.7 million-square-foot Class A office building sited between 52nd and 53rd streets in Midtown Manhattan, Paramount announced Monday.

Completed in 1965, the 45-story building is currently 71.5 percent leased.

The new five-year interest-only loan has an initial weighted average interest rate of 2.96 percent and consists of a $500 million tranche that bears interest at a fixed rate of 3.11 percent and a $360 million tranche that bears interest at a variable rate of LIBOR plus 2.65 percent.

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The proceeds from the refinancing were used to repay the existing $850 million loan that was scheduled to mature in November 2021. The previous lender was AXA Equitable Life Insurance Co., according to CommercialEdge.

According to Wilbur Paes, Paramount’s COO, CFO & treasurer, the transaction is a strong endorsement of the strength of the New York City office market. “With the refinancing of this high-quality Class A asset in today’s attractive credit markets, we have strengthened our balance sheet and improved financial flexibility,” he added in a prepared statement.

Up, down and out

Midtown Manhattan office asking rents have fallen by 5.4 percent, to an average of $73.79, since the recent high in the third quarter of 2020, driven (as elsewhere in Manhattan) by a surfeit of sublease space, according to a second-quarter report from Cushman & Wakefield.

Vacancy in most Midtown office submarkets has hit “historic levels,” and year-to-date absorption is a negative 6.7 million square feet. New leasing is up, however, with 4.1 million square feet taken up so far in 2021, also according to Cushman & Wakefield.

Last December, Paramount exited the Washington, D.C., area with the sale of 1899 Pennsylvania Ave. The 190,955-square-foot Class A office sold for $103 million, or $12 million less than had been asked originally, reportedly because of pressure on the office market following the onset of the pandemic.

In May, Paramount revealed plans for a $250 million renovation of 60 Wall St. in Lower Manhattan, which since 2007 had been the North American headquarters for Deutsche Bank. That lease, however, expires next year, and Deutsche Bank has already signed a lease for 1.1 million square feet at Related Cos.’ Time Warner Center on the Upper West Side.