By Sarah Trefethen
The Cherit Group’s $1.1 billion purchase of the Sony Building, which closed on March 8, has secured $925 million in bridge acquisition financing arranged by SL Green.
The loan consists of a $600 million senior loan originated by Bank of China, along with a $175 million senior mezzanine debt which SL Green sold to a private investment manager and a $150 million junior mezzanine debt originated by SL Green.
The Chinese lender’s $600 million loan is another example of the bank’s pattern in recent years of making selective but substantial investments in U.S. real estate.
“This is such a high-profile deal in a wonderful location, and a great piece of real estate, that I’m not surprised at all that they would be interested in that profile of a transaction,” said Andrew Singer, chairman and CEO of the Singer & Bassuk Organization.
Nonetheless, he added, “It’s a gigantic loan for one bank to make on any one property.”
According to SL Green, the financing will mature in three years, when the Sony Corporation, which uses the building as its headquarters, is scheduled to move out.
At that time, Joe Cherit has indicated he plans to convert the 53-story, 852,830 s/f office tower to residential condominiums.
The building, which has a distinctive keyhole-like roof pediment, was originally built for AT&T in the 1980’s.
The Wall Street Journal recently reported that Bank of China had $3.7 billion in commercial property loans outstanding in its U.S. branches as of the fourth quarter, according to Trepp LLC, making it the No. 3 foreign property lender in the U.S. behind Canada’s TD Bank Group’s Toronto-Dominion Bank BMO Financial Group’s Bank of Montreal.
Following completion of the financing, SL Green sold one half of its interest in the junior mezzanine debt.
“This deal illustrates SL Green’s ability to structure, syndicate and execute financing for complex capital transactions,” David Schonbraun, SL Green’s co-chief investment officer, said in a statement. “While we are best known as New York City’s largest office landlord, we also have emerged as a major player in the structured finance arena. In that regard, SL Green is now the primary provider of subordinate capital for real estate transactions in the greater New York market.”
Ironhound Management was the exclusive advisor to the borrower.