Rockefeller Center Rocks On With $3.5B Refi

What You Need To Know

Tishman Speyer has locked down a massive refinance for Rockefeller Center with a $3.5B CMBS loan — the largest issuance ever for a single office asset.

The loan retires the 7.3M SF, 13-building campus’s 20-year, $1.7B CMBS loan and mezzanine financing that was set to mature in May 2025. The new five-year loan comes with a fixed interest rate of approximately 6.2%, evidence that developers may not expect rates to drop as quickly as we were hoping.

A Kroll Bond Rating Agency report assigned the campus a value of approximately $3.7B, almost 40% below the appraiser’s as-is value of $6.1B.?

In an email, land and air rights specialist Duane Burress told me that given a loan-to-value ratio of 57%, a loan of more than $3B on a $6B value makes sense, with the properties appraised at about $800 or more per SF from a range with a high point of $3K per SF.?

“The $3.5B refinancing signals that lenders have begun to loosen their credit standards, especially for prime assets,” Burress said. “With billions of dollars in dry powder available, it’s evident that well-located, culturally significant, and historically valuable properties continue to attract capital.”

Still, Rockefeller Center’s net rental revenue last year was $65M below 2019 levels. As a result, the remaining debt will be spent on a plan to reposition Rockefeller Center away from office use.

Tishman Speyer has already been leaning into Rockefeller Center as a tourist destination — and the cash that comes with it.?

The campus is already iconic, sure. Winter in New York is nothing without a walk through FAO Schwarz and a photo of the gargantuan Norway spruce looming over the ice rink.?

But in 2020, as part of its capital improvement program, Tishman Speyer received approval from the Landmarks Preservation Commission to open the lower-level passageways around the rink, opening room for restaurants to move in.?

This month, a three-floor observation deck opened — a huge moneymaker that NYC developers have zeroed in on. Observatory revenue was responsible for 18%, $34M, of Empire State Realty Trust’s total second-quarter revenue. SL Green Realty similarly made $36M from One Vanderbilt’s Summit, approximately 16% of its third-quarter revenue. In 2021, KKR bought a majority stake in Hudson Yards’ Edge observation deck for more than $500M.

— Sasha Jones

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What I Want To Know?

Tishman Speyer isn't the only one rethinking its debt loads.?

U.S. and Canadian equity REITs have $401B of debt maturing in 2025 through 2029, according to a study by Moody’s Ratings. That’s up 10% from $365B in last year's 2024 through 2028 study. And debt maturing in the first two years accounts for about 44% of the five-year total, up from 32% in the former report.

REITs with debt that has been rated below investment grade by credit rating agencies may face the greatest trouble. Such speculative-grade REITs may be victims of the “pull-forward effect,” meaning that when the first tranche of debt in a company's capital stack comes due, it may need to refinance multiple tranches of debt at once.

In 2025, speculative-grade refinancing requirements have ballooned to $58B, nearly four times the amount of debt otherwise due in 2025, indicating the number of 2026 revolver expirations being pulled into 2024, according to Moody’s report.

Is the pull-forward effect becoming more frightening? How are such REITs preparing to address their capital structure, especially since the pull-forward effect reduces flexibility and increases refinancing risk?

First Look

The city is planning an upgrade for Fifth Avenue between Bryant Park and Central Park. The proposed design would make the retail corridor more pedestrian-friendly, expanding sidewalks by 46%, shortening crosswalks and reducing the number of traffic lanes from five to three, according to an announcement by the mayor’s office.

That announcement failed to mention that it would cost more than $350M, which would be paid through a mix of public and private financing, the city later told the AP.?

“The redesign is projected to pay for itself in less than five years through increased property and sales tax revenue,” the announcement says.

Can I Give You My Number?

$402M

The amount Floyd Mayweather Jr. is set to spend on a 1,000-unit affordable housing portfolio, largely in Upper Manhattan. The deal is huge given that in the third quarter, a total of $717.4M was spent across 30 transactions. But with the state of rent-stabilized and affordable housing since 2019, the deal has been a bit of a head-scratcher.

They Said What??

“The balance this year has been very heavy toward the investing relative to the harvesting,” Blackstone CEO Stephen Schwarzman told analysts when asked when the asset management giant would consider a shift toward selling some of its real estate.

Hang Out With Me

• Tuesday: CoStar Group will hold its earnings call at 5 p.m.?
• Also Tuesday: The City Council Subcommittee on Zoning and Franchises will hold a public hearing on City of Yes for Housing Opportunity as the proposal makes its way toward a final vote.
• Wednesday: The City Council Committee on Consumer and Worker Protection will vote on the hotel licensing bill.
• Thursday: CBRE is the first major CRE brokerage to report third-quarter earnings this season. A conference call will be held at 8:30 a.m.
• Friday, Saturday and Sunday: Happy Halloweekend! Even though Halloween isn’t until next Thursday, the verdict seems to be that the parties are the weekend before, not after, the holiday — controversial, I know.

Drop The Hot Goss

The Slice is produced by Bisnow Senior New York City Reporter Sasha Jones and is edited by Deputy Managing Editor Ethan Rothstein. Got an answer to my questions or info that you think I’d be interested in? I’m always happy to chat, on or off the record. Reach me at [email protected] or @SashaJones.06 on Signal, an encrypted messaging app.