SL Green JV Lands $1.3B Construction Loan

One Madison Avenue. Image courtesy of SL Green

SL Green Realty Corp. and its joint venture partners have closed on a $1.3 billion construction loan for the One Madison Avenue redevelopment project. The loan is the largest New York City office construction facility so far in 2020, according to SL Green, which is working with the National Pension Service of Korea and Hines to build the office tower.

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The loan was provided by Wells Fargo, TD Bank, Goldman Sachs, Bank of America, Deutsche Bank and Axos Bank. The facility has a term of up to six years, with a floating interest rate of 3.35 percent over LIBOR, and the ability to reduce the spread to as low as 2.5 percent upon meeting certain leasing and completion milestones.

With financing in place, the joint venture has begun construction on the redevelopment project, which has a targeted completion in 2023. The National Pension Service of Korea and Hines joined the project in May, when the two acquired a 49.5 percent stake in One Madison Avenue from SL Green. The joint venture also tapped Kohn Pedersen Fox and AECOM Tishman to design and build One Madison Avenue, as the project team previously worked on One Vanderbilt Avenue.

As for One Madison Avenue, the project will be moving forward as-of-right by using 218,000 square feet of available development rights. The $2.3 billion redevelopment calls for the construction of a 530,000-square-foot tower with column-free floors above an existing nine-story podium. The redevelopment will increase the building’s size to 1.4 million square feet and 27 stories, and will offer 32,000 to 35,000-square-foot floorplates.

The office tower’s 10th and 11th floors will feature roof decks, while the rest of the building’s amenities will include an 800-person, multi-purpose event space, 15,000-square-foot food market, 9,000-square-foot tenant lounge and fitness center. One Madison Avenue is also expected to receive WELL and LEED Gold certifications.

Marc Holliday, chairman & CEO of SL Green, said in prepared remarks that One Madison Avenue will be an important new office development in Midtown South that will attract top companies and talent. Holliday also said in his prepared statement that despite the headwinds caused by current and temporary challenges, SL Green is focused on boosting the New York City economy.

A series of redevelopments

As a redevelopment project, One Madison Avenue’s story dates back to when it was first built in 1893. The building was known as one of the city’s largest office buildings back then and continued to grow by going through several major redesigns. With its latest redevelopment, Kohn Pedersen Fox wanted to create a dramatic and positive impact on the city. 

Doug Hocking, design principal at Kohn Pedersen Fox, said in prepared remarks that the project team was looking to preserve the character of the original building, while also opening it up to the adjacent Madison Square Park.