Clarion Partners announced the closing of a $61.2 million mezzanine loan, which it provided as part of the financing of 575 Lexington Avenue.
New York Life Real Estate Investors closed on the sale of 575 Lexington Avenue last week to a partnership that includes Angelo Gordon & Co, George Comfort & Sons and Normandy Real Estate Partners, for a reported $510 million.
New York Life joint venture partnership that included Prudential Real Estate Investors and Normandy Real Estate Partners bought the 745,000 s/f building in 2012 and and repositioned the asset with a full renovation of the lobby and storefront, new elevator cabs, modernized building systems and new tenant fit-outs.
The partnership also renewed and expanded Cornell University’s footprint in the building to a total of 212,000s/f through 2028.
“The partnership acquired the property on the premise of finding value in an asset in a gateway central business district in need of major renovations and repositioning to a first class office building through capital upgrades and leasing. We have executed on that business strategy and were able to successfully capitalize on that value creation,” said Daniel Davitt, senior director at New York Life Real Estate Investors.
The property, built in 1958, is situated in one of Manhattan’s few areas with direct subway access to Penn Station, Grand Central and Port Authority Bus Terminal.
“Midtown East boasts one of New York City’s leading office submarkets and we’re very pleased to provide mezzanine debt on this asset. The very accomplished ownership team, Angelo Gordon & Co, George Comfort & Sons and Normandy Real Estate Partners, has great plans for this building and we were able to structure our financing to help facilitate those plans.” said Drew D. Fung, managing director and head of debt investments at Clarion Partners.
The Clarion Partners investment, made on behalf of a commingled fund that Clarion manages and which leveraged the firm’s real estate debt investment business, is expected to provide attractive, risk-adjusted returns over the term of the loan.