Edge Fund, HSBC sign $445M refi with MSD Partners, Apollo for Times Square office, part of $540M deal

Edge Fund Advisors and HSBC through the entity Spusv5 1540 Broadway, LLC as borrower signed a senior refinance and construction loan with lender MSD Partners and Apollo Global Management through the entity Acrefi Cs U, LLC valued at $445 million for the office condo at 1540 Broadway in Times Square, Manhattan.
The deal closed on March 25, 2022 and was recorded on April 5, 2022. The prior lender was DekaBank which held debt that had an original loan amount of $450.7 million. The property has 713,211 square feet of built space according to PincusCo analysis of city data. The loan price per built square foot is $623 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 March 5, 2009, for $355 million. The signatory for Edge Fund Advisors and HSBC was Gary R. Siegel. The signatory for MSD Partners and Apollo Global Management was Kenneth Gerold. Edge Fund Advisors and HSBC as owners secured the funding with Newmark’s Dustin Stolly, Jordan Roeschlaub and Nick Scribani negotiating the deal which was a total package of $540 million, the NY Post and the Commercial Observer reported. This is for the office condo unit. Vornado Realty Trust owns a retail condo unit. The senior financing package of recorded loans was $445 million including $43.8 million in a building loan and a $52.5 million project loan. The difference between the recorded debt of $445 million and $540 million was not known but is typically mezzanine debt.

The property

The 1540 Broadway office condo parcel has a total lot size of 713,211 square feet. The city-designated market value for the property in 2022 is $293.4 million.

Violations and lawsuits

The property was not involved in any lawsuits or bankruptcies in the past years. In addition, according to city public data, the property has not received any significant violations in the last year.

Development

On these lots, there is one active major alteration construction project for a 38,686-square-foot office (B) building. The project was developed by Michael Clarke with plans filed July 7, 2021 and it has not been permitted yet.

The neighborhood

In Times Square, the majority, or 58 percent of the 10.1 million square feet of commercial built space are office buildings, with hotel buildings next occupying 30 percent of the space. In sales, Times Square has had very little sales volume relative to other neighborhoods with $53.7 million in sales volume in the last two years. For development, Times Square has 1.5 times the average amount of major developments relative to other neighborhoods and is the 14th highest in Manhattan. It had 1.4 million square feet of commercial and multi-family construction under development in the last two years, which represents 14 percent of the neighborhood’s built space.

The block

On this tax block, PincusCo has identified the owners of three of the 25 commercial properties representing 1,044,264 square feet of the 2,644,692 square feet. The largest owner is Silverstein Properties, followed by Effy Hematian and then City of New York. There are no active new building construction projects on this tax block.

The majority, or 59 percent of the 1.8 million square feet of built space are office buildings, with hotel buildings next occupying 31 percent of the space.

Surrounding

Within a 400-foot radius of 1540 Broadway, PincusCo identified four commercial real estate items of interests occurred over the past 24 months.
Of those four items, one was for major renovation including a certificate of occupancy change. It was a permit application filed on July 7, 2021 for the $7 million renovation of 77,372-square-foot B building with zero residential units at 1540 Broadway.
One of those four items was a sale which Effy Hematian bought the 76,660-square-foot, 85-unit office building (O6) on 145 West 45th Street for $92 million from Jacob Aini on December 2, 2019.
Of those four items, two were loans above $5 million totaling $201 million. The most recent of the two was Elo Equity which borrowed $141 million from Citibank secured by the 61,160-square-foot, two-unit office building (O6) on 151 West 46th Street and two other properties on December 23, 2020.

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