Rudin signs $395M senior loan for 3 Times Square, part of $415M rehab financing

Rudin Management through the entity 3 Times Square Associates, LLC as borrower signed a senior loan with lender JPMorgan Chase valued at $395 million for the midblock office building at 3 Times Square in Times Square, Manhattan. The total loan package, according to media reports, was $415 million for the renovation of the tower.
The deal closed on June 10, 2022 and was recorded on June 28, 2022. The prior lender was Prudential Financial which held debt that had an original loan amount of $94.8 million. The property has 855,000 square feet of built space according to PincusCo analysis of city data. The loan price per built square foot is $461 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 Rudin Management was Andrew Migdon. The signatory for JPMorgan Chase was Leart Saliu. Real Estate Weekly first reported the financing deal. The funding will go towards renovating the lobby, building a tenant amenity floor, outdoor space and major modernization, according to the report. Other lenders included Bank of America and M&T Bank.

Prior sales and revenue

The 855,000-square-foot property generated revenue of $89.7 million or $105 per square foot, according to the most recent income and expense figures.

The property

The 3 Times Square parcel has frontage of 200 feet and is 164 feet deep with a total lot size of 29,630 square feet. The lot is irregular. The zoning is C6-7 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 $429.6 million. The most recent loan totaled $94.8 million and was provided by PGIM Real Estate on October 12, 2021.

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 $2,500 in ECB penalties and $2,730 in OATH penalties in the last year.

Development

For the tax lot building, it received its initial certificate of occupancy on July 13, 2012. 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 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 two of the 10 commercial properties representing 1,005,000 square feet of the 2,178,824 square feet. The two identified owners are Rudin Management Company and Tishman. There is one active new building construction project totaling 34,313 square feet. It is a 34,313-square-foot M building developed by Jhaelen Hernandez-Eli with plans filed January 27, 2020 and it has not been permitted yet.

The majority, or 43 percent of the 2.2 million square feet of built space are hotel buildings, with office buildings next occupying 39 percent of the space.

The borrower

The PincusCo database currently indicates that Rudin Management owned at least 20 commercial properties with 5,871,292 square feet and a city-determined market value of $1.7 billion. (Market value is typically about 50% of actual value.) The portfolio has $255.7 million in debt, with top three lenders as Bank of America, New York Life Insurance Company, and Prudential Financial respectively. Within the portfolio, the bulk, or 54 percent of the 5,871,292 square feet of built space are office properties, with elevator properties next occupying 46 percent of the space. They are all located in Manhattan.

Surrounding

Within a 400-foot radius of 3 Times Square, Pincusco identified seven commercial real estate items of interests occurred over the past 24 months.
Of those seven items, three were for major renovation including a certificate of occupancy change. They were two permit applications with a total initial cost of $600,001 and one permit with a total initial cost of $369,268. The most recent of these three items was the filing on March 4, 2022 for a 22,448-square-foot E building with zero residential units at 7 Times Square.
Of those seven items, two were sales above $5 million totaling $1.6 billion. The most recent of the two was Yellowstone Real Estate Investments which bought the 235,300-square-foot, one-unit office building (O4) on 221 West 41st Street for $161.1 million from EPIC LLC on March 24, 2022.
Of those seven items, two were loans above $5 million totaling $686.4 million. The most recent of the two was Jamestown which borrowed $290 million from JPMorgan Chase secured by the 111,653-square-foot, one-unit mixed-use building (K4) on 1475 Broadway on April 12, 2022.

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