ING has backed international investor The Olayan Group, underwriting a $570 million bridge loan for the Middle Eastern family office’s acquisition of the Sony Building in Manhattan.
The Dutch bank has lent to Olayan and the group’s real estate advisor Chelsfield before, notably in September 2014 when ING led a club of four banks which provided €750 million of debt secured on a prime Paris office portfolio.
ING Capital only resumed new origination in the US last year, and Mike Shields, head of real estate finance in western Europe and the USA, said the latest financing demonstrated the bank’s ability to underwrite and execute large deals on its own and around the world.
The Olayan Group has bought the 37-story Manhattan skyscraper at 550 Madison Avenue in New York as a repositioning play. The building used to be occupied by Sony but the 776,000 sq ft of office space is empty and it will be renovated and rebranded.
ING’s loan is a short-term, first mortgage. “ING committed the bridge facility very quickly at attractive terms so that this deal could conclude within a very tight time frame,” said Nadim Tabbara, Olayan’s chief financial officer.
The building with its distinctive Chippendale-style roof pediment was previously owned by developers Joe Chetrit and David Bistricer who bought it for $1.1 billion in March 2013 with a plan to turn it into luxury condominiums.
The New York luxury residential market has since cooled, and Real Estate Capital reported earlier this year that the pair were reviewing their options including seeking fresh debt to refinance $600 million of senior debt held by Bank of China, a $175 million senior mezzanine loan held by an investment manager and a further $150 million of junior mezzanine held by partly by SL Green.
“The Sony Building is a New York City landmark,” said Craig Bender, New York-based managing director at ING Capital. “We are especially proud to have worked on this deal for one of our longstanding global clients. Our long- term real estate investment outlook is strong, and we look forward to seeing how Olayan and Chelsfield reposition this property in the future.”
It is ING’s second large senior loan against a Manhattan office tower this year. The bank was part of a three-strong club, alongside Deutsche Bank and Bank of China, which provided a $1 billion, five-year floating-rate loan to REITs SL Green and Vornado Realty in March for the acquisition of 280 Park Avenue.
That loan refinances $693 million of debt that was due this month.
ING originates loans to hold on balance sheet but also syndicates large deals. Shields and Bender have re-hired Ben Herman as a US director to manage real estate loan syndications.
Herman joined in April having previously worked at the bank between 2011 and 2014, handling originations and the sale of nearly $2 billion of performing loans. Recently he worked for SRF Ventures where he focused on origination of bridge loans and capital advisory assignments.