Narrative
Full Description
Project narrative
On March 15, 2013, a syndicate of three lenders — the Bank of China (BOC), SL Green Realty Corp., and a Performing Debt Fund managed by Apollo Global Management LLC — entered into a $925 million USD syndicated bridge loan agreement with an unspecified special purpose vehicle — a joint venture between Chetrit Group, LLC, a real estate developer based in New York and Clipper Equity LLC, a New York-incorporated and headquartered real estate developer — for the 550 Madison Avenue Acquisition Project. This loan carried a maturity period of up to three years concurrent with the expiration of the Sony Corporation's lease on the building. This loan was divided into a $600 million USD senior mortgage loan tranche provided by BOC secured by (i.e. collateralized against) 550 Madison Avenue, a $175 million USD senior mezzanine debt provided by the Performing Debt Fund with an accordion feature to increase to $250 million USD, and a $150 million USD junior mezzanine debt originated by SL Green. SL Green Realty arranged and syndicated the debt to the other lenders; following completion, it sold a $75 million USD interest in the junior mezzanine debt. Record ID#106294 captures BOC's contribution. The proceeds were to be used by the borrower to finance its $1.1 billion USD purchase of the 550 Madison Avenue, a 37-story, 852,830-square-foot tower known as the Sony Building located in the Plaza District of Manhattan, New York City, New York. Sony Corporation used the building as its U.S. headquarters. Chetrit won the auction for the building in January 2013 with a $100 million USD down payment and a letter of credit worth nearly $600 million USD from a sovereign Middle Eastern investment fund. Sony Corporation was the seller; the sale agreement included a lease for three years, giving Chetrit Group time to decide whether to convert the building to residential luxury condominiums or to a hotel or keep it as an office and retail property; Chetrit indicated interest in conversion to condominiums. The acquisition and planned conversion was seen as risky because it would take up to two years and $500 million USD for the Chetrit Group to renovate the building. In March 2016, the lending syndicate entered into an agreement with the borrower to amend the $925 million USD syndicated loan; in the amendment, the lenders extended the maturity period of the loan by six months — for a new maturity period of 3.5 years to give it time to repay the $925 million USD loan and to finance the conversion of the building into condominiums and a five-star hotel. Record ID#106295 captures BOC's contribution to the extension. Then, in April 2016, Chetrit and Clipper began talks to sell the property to Olayan America, which closed in late May 2016 for $1.4 billion USD.