Shorenstein Gets $170M Loan from MetLife for Manhattan Asset

By Gail Kalinoski, Contributing Editor

MetLife  Inc. has provided Shorenstein Properties L.L.C. with $170 million in financing for 850 Third Ave., a 21-story, 615,000-square-foot office building on Manhattan’s East Side. The three-year, floating-rate loan replaces a $180 million loan provided by Deutsche Bank in 2010.

“This is a proven property with a strong tenant base in a core market for MetLife,” Robert Merck, senior managing director and global head of real estate for MetLife, said in a statement. “We have a great relationship with Shorenstein Properties and look forward to working with them in this and other markets in the future.” In March, MetLife reported that it originated about $11.5 billion in commercial real estate loans last year.

For San Francisco-based Shorenstein, 850 Third Ave. serves as its New York City office. The building is located in the Midtown East Side office submarket on the west side of Third Avenue between 51^st and 52^nd streets.

Designed by Emery Roth and Sons and formerly known as the Western Publishing Building, 850 Third Ave was completed in 1963. It was redeveloped in 1996 and renovated in 2008. That year, Shorenstein bought a majority stake in the building, along with Park Avenue Tower at 65 East 55^th St., for $930 million from Macklowe Properties, which faced a financial crisis at the time. Shorenstein is selling Park Avenue Tower to Blackstone Group, according to recent media accounts. Shorenstein’s Manhattan holdings also include 477 Madison Ave.

Other occupants of 850 Third Ave., which is currently 91 percent leased, include Discovery Communications, Shearman & Sterling, L.L.P., Radio One, the City of New York, Hall Capital Partners, L.L.C., and The Gerson Lehrman Group. Retail tenants are Chase Bank, which has a ground-floor branch, and Ann Taylor. The building, whose exterior design has been compared to the tiers of a wedding cake, has floor plates that range from 5,200 to approximately 40,000 square feet.

Midtown Manhattan enjoyed a strong second quarter, as leasing volume rose 19 percent to 4.69 million square feet compared to the in the first quarter, according to CBRE Group Inc.’s report on the Manhattan office market. Cushman & Wakefield Inc.’s second-quarter report noted that the Midtown East Side submarket had year-to-date leasing of 874,201 square feet. Average Class A rents for the second quarter were about $65 per square foot, according to Cushman & Wakefield. Direct vacancy rate was 5.5 percent and the overall vacancy rate was 7.39 percent, the firm reported.