RFR assigns $32M in first mortgage debt to Brookfield’s mezz at 350 Madison

Aby Rosen’s RFR Holding through the entity 350 Madison Acquisition LLC as borrower signed a refi loan with lender NYS Teachers’ Retirement System valued at $168 million for two properties including the office building (O4) at 350 Madison Avenue in Grand Central, Manhattan and mixed-use building (K4) at 10 East 45th Street in Grand Central, Manhattan.
The original 2018 senior loan was provided by the NYS Teachers’ Retirement System and at the same time, RFR was given a $50 million mezzanine loan by Brookfield Properties’s Brookfield Senior Mezzanine Real Estate Finance Fund. This new refinancing allocates $32 million from that senior loan to the mezzanine loan, reducing the senior debt to $168 million. The Commercial Observer reported on mezzanine loans in 2019 here, including 350 Madison Avenue.
The deal closed on November 10, 2022 and was recorded on November 16, 2022. The two properties have 399,098 square feet of built space and 26,905 square feet of additional air rights according to PincusCo analysis of city data. The loan price per built square foot is $420 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 signatory for RFR Holding was Thomas Lavin. The signatory for NYS Teachers’ Retirement System was Michael L. Morrell.

Because multiple properties have been transacted, some of the following sections will follow the property with the largest assessed value, which in this case, is the property on 352 Madison Avenue.

Prior sales and revenue

The two properties with a total of 399,098 square feet of built space generated revenue of $29.8 million per year or $75 per square foot.

The property

The 350 Madison Avenue parcel has frontage of 115 feet and is 175 feet deep with a total lot size of 18,800 square feet. The lot is irregular. The zoning is C5-3 which allows for up to 15 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 $130.3 million.

Violations and lawsuits

There were no lawsuits or bankruptcies filed against the properties since September of 2020. In addition, according to city public data, the properties have received two DOB violations and $5,400 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 Grand Central, the majority, or 80 percent of the 43.9 million square feet of commercial built space are office buildings, with hotel buildings next occupying 8 percent of the space. In sales, Grand Central has 2.5 times the average sales volume among other neighborhoods with $875.2 million in sales volume in the last two years and is the 17th highest in Manhattan. For development, Grand Central has 1.2 times the average amount of major developments relative to other neighborhoods and is the 22nd highest in Manhattan. It had 1.2 million square feet of commercial and multi-family construction under development in the last two years, which represents 3 percent of the neighborhood’s built space.

The block

On the tax block of 350 Madison Avenue, PincusCo has identified the owners of two of the 14 commercial properties representing 176,776 square feet of the 1,773,833 square feet. The two identified owners are Brause Realty and Beacon Holdings Group Llc.
On the tax block, there was one new building construction project filed totaling 750,400 square feet. It is a zero-unit, 750,400-square-foot B building developed by Elizabeth Reilly with plans filed August 5, 2022 and it has not been permitted yet.

the majority, or 90 percent of the 1.8 million square feet of built space are office buildings, with retail buildings next occupying 9 percent of the space.

The borrower

The PincusCo database currently indicates that Rfr Holding owned at least 25 commercial properties in New York City with 3,211,968 square feet and a city-determined market value of $1.3 billion. (Market value is typically about 50% of actual value.) Within the portfolio, the bulk, or 92 percent of the 3,211,968 square feet of built space are office properties, with hotel properties next occupying 6 percent of the space. They are all located in Manhattan.

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