(Bloomberg)—RXR has landed a $1.3 billion loan refinancing for a Times Square office tower as it ramps up building improvements to attract new tenants.
Backers for the 5 Times Square loan, which runs through May 2026, include Morgan Stanley, Apollo Global Management Inc. and American International Group Inc., according to a statement Tuesday. RXR and its partners have invested another $300 million to help renovate the site.
Those building improvements include a new lobby, elevators, food and beverage locations, a golf simulator, a fitness facility and meeting and event spaces. SL Green Realty Corp. is converting its $139 million mezzanine loan into equity and will partner with RXR.
Manhattan’s office market has been dealing with a supply glut as many workers stayed remote during the pandemic. Companies looking for more space in the market have been gravitating toward newer, upgraded buildings to attract talent.
The capital will also be used to help finance certain incentives such as leasing commissions and tenant improvements to attract companies to the building. Ernst & Young LLP, the tower’s former anchor tenant, relocated to a new skyscraper on the far west side of Manhattan last year. Earlier this year, RXR signed a long-term lease with media company Roku Inc. at 5 Times Square.
“What you’re seeing is that capital is being much more selective and the debt markets in particular are focusing on the best borrowers and the best buildings,” Scott Rechler, RXR’s chief executive officer, said in a phone interview. “Tenants are pursuing buildings that are the highest-quality buildings — that’s where equity investors are interested in investing in.”
To contact the author of this story: Natalie Wong in New York at [email protected].
© 2022 Bloomberg L.P.