BXP Lands $1.2B Construction Loan at 343 Madison
A highly anticipated office development snagged a fresh round of debt, totaling in the billions.
BXP scored a $1.2 billion construction loan for its development at 343 Madison Avenue next to Grand Central Terminal, the company disclosed in its second-quarter earnings report. The loan carries a 2.5 percent secured overnight financing rate, which will drop to 2.25 percent after leasing and construction benchmarks are hit.
Wells Fargo led the financing package, which also carried support from BofA Securities, Bank of New York Mellon and JPMorgan Chase. The initial term is for four years with a one-year extension option available.
The $2 billion development at the site of the Metropolitan Transportation Authority’s former headquarters has been beset by financial challenges. In September, BXP lowered its dividend by 30 percent to help pay for the office tower, seeing $50 million in quarterly savings. Norges Bank, Norway’s sovereign wealth fund, backed out of a plan to be a 45 percent partner in the project last summer.
But the leasing story at the 46-story, 930,000-square-foot project has been a positive one lately. Insurance firm Starr signed a 275,000-square-foot lease in December to anchor the building, then exercised an expansion option to bring its total occupancy to 320,000 square feet across fourteen floors.
In June, McDermott Will & Schulte, a Chicago law firm, signed a lease for roughly 150,000 square feet. Additionally, BXP disclosed during its earnings call that two more tenants are in negotiations, according to the Commercial Observer, which would bring the tower to 70 percent pre-leased.
The building is not expected to open until 2029.
Elsewhere in Manhattan, BXP recently put the ground lease for the 1.2-million-square-foot 7 Times Square on the market with an expected asking price between $700 million and $750 million.
The property, developed in 2004, is 91 percent leased to tenants including KnitWell Group, Snowflake, GSI Exim America, Friedman Kaplan and Flewber, featuring amenities such as conference space and electronic billboards.
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