Deerfield Management signs $440M refi with AIG for office in Flatiron District

Deerfield Management through the entity 345 Pas Holding LLC as borrower signed a refi loan with lender AIG through the entity Aig Asset Management (U.S.), LLC valued at $440 million for the office building at 345 Park Avenue South in Flatiron District, Manhattan.
The deal closed on April 22, 2022 and was recorded on May 12, 2022. The prior lender was LoanCore Capital which held debt that had an original loan amount of $316.8 million. The property has 244,157 square feet of built space according to PincusCo analysis of city data. The loan price per built square foot is $1,802 per the PincusCo analysis. (The price per square foot analysis is the transaction price divided by square feet as reported in public records and assumes no air rights have been sold.)
The owner bought the property on September 5, 2019, for $344.5 million. The signatory for Deerfield Management was Bryan Sendrowski. The signatory for AIG was Emily Marcus. Bryan Sendrowski is a partner of Deerfield Managment. Commercial Observer first reported the refi loan.

Prior sales and revenue

The 244,157-square-foot property generated revenue of $14.8 million or $61 per square foot, according to the most recent income and expense figures.

The property

The 345 Park Avenue South parcel has frontage of 197 feet and is 120 feet deep with a total lot size of 20,737 square feet. The lot is irregular. The zoning is C6-4A which allows for up to 10 times floor area ratio (FAR) for commercial and up to 10 times FAR for residential with inclusionary housing. The city-designated market value for the property in 2022 is $65 million. The most recent loan totaled $405 million and was provided by LoanCore Capital on September 5, 2019.

Violations and lawsuits

There were no lawsuits or bankruptcies filed against the property since September of 2020. In addition, according to city public data, the property has received 19 DOB violations, $2,400 in ECB penalties, and $5,060 in OATH penalties in the last year.

Development

There are no active new building construction projects or major alteration projects with initial costs more than $5 million on this tax lot.

The neighborhood

In Flatiron District, the majority, or 62 percent of the 27.7 million square feet of commercial built space are office buildings, with residential elevator buildings next occupying 25 percent of the space. In sales, Flatiron District has the 6th highest sale turnover among other neighborhoods in the city with $1.6 billion in sales volume in the last two years. For development, Flatiron District has had very little major development activity relative to other neighborhoods.It had 583,415 square feet of commercial and multi-family construction under development in the last two years, which represents 2 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of three of the 28 commercial properties representing 275,180 square feet of the 709,204 square feet. The largest owner is Deerfield Management, followed by Icon Realty Management and then Jackson Mak. There are no active new building construction projects on this tax block.

The majority, or 41 percent of the 979,544 square feet of built space are specialty buildings, with office buildings next occupying 33 percent of the space.

The borrower

The PincusCo database currently indicates that Deerfield Management owned at least one commercial property with 244,157 square feet and a city-determined market value of $85.9 million. (Market value is typically about 50% of actual value.) The portfolio has $405 million in debt, borrowed from LoanCore Capital. The portfolio consists of at least a single office property. It is located in Manhattan.

Surrounding

Within a 400-foot radius of 345 Park Avenue South, Pincusco identified 10 commercial real estate items of interests occurred over the past 24 months.
Of those 10 items, one was for major renovation including a certificate of occupancy change. It was a permit application filed on May 5, 2022 for the $398,250 renovation of 52,082-square-foot R-2 building with seven residential units at 118 East 25th Street.
Of those 10 items, four were sales above $5 million totaling $613.8 million. The most recent of the four was Boston Properties which bought the 389,000-square-foot, two-unit office building (O4) on 354 Park Avenue South for $300 million from Empire Asset Management on December 30, 2021.
Of those 10 items, five were loans above $5 million totaling $322.4 million. The most recent of the five was Boston Properties which borrowed $220 million from Bank of New York Mellon secured by the 389,000-square-foot, two-unit office building (O4) on 354 Park Avenue South on December 30, 2021.

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