By Linda O’Flanagan
Brookfield Office Properties Inc. this week closed on $1 billion in financing on two of the four office towers at Brookfield Place in Lower Manhattan.
The news could signal that downtown’s biggest landlord is close to sealing two leases that will swallow up a chunk of the three million square feet in pending vacancies at the former World Financial Center.
In February, chief executive officer Dennis Friedrich told analysts the landlord was negotiating letters of intent with two potential tenants, noting there was a “high probability” that leases for a combined 1.5 million square feet will be completed.
“We’re at the stage of massaging, or finalizing the financial and some of the other major terms,” Friedrich said. “It’s a pretty advanced stage. There’s always a chance that things could go on an off track, but we’re feeling pretty good about where these are moving, and we’ve been working on them for a little while.”
In an announcement made late Monday night, Brookfield Office Properties said the $1 billion loan was made on the 2.5 million square foot 225 Liberty St. (formerly 2 World Financial Center) and the 1.8 million-square foot 250 Vesey St. (4 World Financial Center)
A consortium of banks led by Deutsche Bank, Royal Bank of Canada, Citibank, Bank of America and Wells Fargo have committed to lending $800 million initially with the ability for Brookfield to draw an additional $200 million.
The term of the floating-rate (currently 3.44%) loan is three years, with two one-year extension options available.
Brookfield has six downtown properties totaling 13 million square feet. In addition to Brookfield Place, the company also owns and manages One Liberty Plaza and One New York Plaza.
It is in the midst of a $250 million renovation that is transforming the retail and public space at Brookfield Place with a curated fashion collection, a European-style marketplace, waterfront dining and chef-driven restaurants. Changes to the Winter Garden entrance will provide a connection from downtown’s new state-of-the-art transportation hubs to the Hudson River, plus expanded public space for the various cultural events offered by Brookfield’s free arts program.
Brookfield Place’s 250,000 s/f of retail space is scheduled to re-open in the fall of 2014. From the company’s perspective, a strong retail mix will do good things for the office space that makes up the majority of the center. “If we create this amazing neighborhood it’s only going to lift the rents upstairs, and we have eight million square feet upstairs. It allows us to make our front door more dynamic,”
Brookfield’s Edward Hogan, national director of retail leasing, told REW during the ICSC convention in Las Vegas last month.
“Ultimately we want the person who works at Brookfield Place to come down to the first two floors and feel like they’ve left work, and they’re in this neighborhood, and the neighborhood’s on the water and has views of the park across the street and it’s an exciting neighborhood. They’ll say: ‘I’ll meet you in Brookfield Place after work even though you live in Midtown, because it’s such a great place to hang out.’”