Jones Lang LaSalle (“JLL”) has been retained on an exclusive basis by the Lender to arrange the sale of a $150.0 million performing mezzanine loan (the “Loan”). The Lender originated the Loan in April 2018 with an initial balance of $150.0 million to provide financing to the Sponsor’s recapitalization of the fee simple ground lessor position of a mixed-use property in the Times Square district of New York, NY (the “Property” or “Collateral”). The opportunity allows an investor to acquire the fulcrum position of a loan within the fee simple capital stack of a trophy asset.
LOAN & COLLATERAL
In April 2018, the Lender originated the interest-only Loan, which carried a 5.100% rate compounding on an actual over 360-day basis. The Loan has an initial maturity date of March 5, 2028, with prepayment opening March 5, 2023. The Loan is currently performing with an unpaid principal balance of $150,000,000. The Loan is secured by a pledge of 100% equity interest in the Borrower, the Fee Simple owner of the Property (the “Equity Collateral”). Constructed in 2018, the mixed-use improvements feature a 452-key luxury branded hotel, 81,500 SF of retail space, and 18,848 SF of LED signage.
Indicative Bid Date: Thursday, October 28th
Best & Final: Thursday, November 18th
Anticipated Close: Week of November 29th
Times Square attracted over 380,000 visitors daily and accounted for $0.22 of every tourism dollar spent in New York City in 2018. While only representing 0.1% of the City’s total land area, Times Square accounted for 15% of the City’s economic output. All components of the Property directly benefited from increased tourism.
NEW YORK CITY RECOVERY
As Times Square’s tourism begins to recover, all Property components are positioned to benefit from the incremental demand attracted to the market while facing very limited competitive supply. As of summer 2021, all components of the improvements have re-opened to the public. Furthermore, the retail is currently 11.3% leased providing ownership with additional upside as tenants look to establish their Times Square retail and signage presence as New York reopens and Broadway returns.
TROPHY COLLATERAL WITH STRONG F&B
The improvements hotel component is the most luxurious Hotel in Times Square, which will allow it to drive the submarket’s rate ceiling. The Hotel boasts four distinct dining experiences split over four floors with indoor and outdoor spaces. The Hotel offers a signature fine-dining restaurant, a modern all-day New York restaurant, a cabaret and performance room, and Lobby Bar all under one roof. Due to the current structure of the outlets, it also allows for an efficient Food & Beverage department.
The Loan is currently performing and has performed since origination despite the COVID-19 pandemic and the Hotel’s closure in 2020.