Narrative
Full Description
Project narrative
In May 2014, a four-bank syndicate — the Bank of China (BOC), Citigroup (as leader), Wells Fargo Bank, N.A., and Barclays Bank Plc — entered into a $1.45 billion USD syndicated loan agreement with SL Green Realty Corp. — a Maryland-incorporated New York Stock Exchange-listed real estate investment trust focused on Manhattan and Manhattan's largest office landlord — for the 388-390 Greenwich Street 2014 Refinancing and Acquisition Project. This loan carried a maturity period of four years with three one-year as-of-right extension options, a final maturity date of June 2018, and an interest rate of LIBOR plus a margin of 1.75%. This loan was secured by (i.e. collateralized against) a commercial mortgage-backed securities (CMBS) and an assignment of leases on 388-390 Greenwich Street. The proceeds were to be used by the borrower to refinance $1.14 billion USD of debt on 388-390 Greenwich Street, a two-building 39-story 2.6 million-square foot office property located in Tribeca of Manhattan, New York City, New York, with a portion of the net proceeds used for SL Green's purchase of Ivanhoé Cambridge Inc.'s 49% stake in the property (giving SL Green 100% of it), which was closed current with the refinancing. Citigroup Inc. uses the building as its global headquarters, with a lease out to 2035. In January 2016, Citigroup announced it would employ a buyback option for the building. In April 2016, Citigroup and SL Green entered into a full agreement for the sale of 388-390 Greenwich Street. The sale would allow SL Green to repay some of its corporate debt and retire the old debt on the property, including the $1.45 billion USD syndicated loan. The sale was completed in June 2016.
Staff comments
1. The individual contributions of the four lenders to this $1.45 billion USD syndicated loan are unknown. Therefore, for the time being, to estimate BOC's contribution, AidData has assumed that each lender contributed equally ($362,500,000 USD) to the loan syndicate. 2. CMBS loans, which are also referred to as conduit loans, are a type of real estate loan that’s secured by a first position mortgage on a commercial property. CMBS loans are typically offered by commercial banks, conduit lenders, or investment banks, and, once they are issued, they are packaged and sold to other investors. Due to that fact that banks do not hold CMBS loans on their balance sheets, they can offer these loans to borrowers at relatively low fixed interest rates, and can also offer borrowers relatively high leverage. 3. A 6-month LIBOR was assumed. The average six-month LIBOR for May 2014 was 0.32312%. Therefore, the interest rate has been coded as 0.32312% + 1.75% = 2.07312%. 4. It is plausible, if not likely, that the specific borrowing institution was a special purpose vehicle subsidiary of SL Green Realty Corp. This issue merits further investigation.