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Grace Building refi loan securitized in $750M SASB deal

The iconic Grace Building in the Grand Central office submarket in midtown Manhattan is the sole asset in a $750 million single-borrower mortgage-backed transaction sponsored by a Brookfield Property Partners joint venture.

According to ratings agency presale reports, the Grace Building at 1114 Avenue of the Americas is being collateralized in the CMBS deal, pooling a portion of a new $1.25 billion loan that is refinancing debt and returning $200 million in equity to Brookfield and JV partner The Swig Co.

The notes offering includes a $304.7 million Class A notes tranche with preliminary AAA ratings from Fitch Ratings and Kroll Bond Rating Agency.

The Grace Building, constructed in 1974, is a 1.5 million square-foot structure that is distinguished by its sloping vertical base on the north and south sides of the building. The property was 94.8% leased to 35 tenants, including major tenants such as Bank of America, Column Financial DBR Investments and JPMorgan Chase.

Brookfield Office Properties

The building lost several major tenants between 2016 and 2018, such as HBO, the National Rifle Association and law firm Cooley LLP. But Grace has since leased out to new tenants including The Trade Desk and Bain & Co, and expanded space of BofA on its 23-year term lease.

Grace has had minimal interruption due to the COVID-19 pandemic, with office vacancy in single digits and office collections remained above 99% during the outbreak period since March. However, four retail tenants have not paid rent for August, September and October. Each is negotiating a repayment, according to presale reports.

The loan was originated by Bank of America, Column Financial, DBR Investments and JPMorgan Chase. Wells Fargo is servicer.

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