Lenders Buy $181.3-Mil Loan on Trophy Tower on Avenue of the Americas

NEW YORK CITY-Kumagai Gumi Company Ltd., a Japanese construction company, owns 1177 Avenue of the Americas in Manhattan, known as Americas Tower. Kumagai took a loan on the building in 1998 and the loan has since changed hands a couple of times. Northwestern Mutual Life Insurance Co. and New York Life Insurance Co., acting as a team, have purchased the $181.3 million loan from CDC Mortgage Capital. Sonnenblick-Goldman Co., an independent real estate investment banking firm, advised CDC on the sale of the loan.

Mark Ehlinger, vice president, and Ken Ziebelman, managing director and principal, both of Sonnenblick-Goldman, explain to GlobeSt.com that Nomura Securities originated the loan in November 1998. Kumagai was the owner then as well. Nomura developed a spin-off company, Capital Company of America, which acted as a real estate lending arm, so to speak, of Nomura. A number of individuals working for Nomura who created the loan, went to work in Capital and continued to handle the loan. When it was first created, the loan was for $185 million.

Nomura disbanded Capital, putting its loans into a portfolio for sale. The Americas Tower loan was sold in 1999 to CDC Mortgage, a completely separate company. Many Nomura employees who’d gone to work for Capital found jobs then with CDC and continued working on the loan they had originated. Now, CDC has sold the loan, finally ending this relationship.

“This is not our typical transaction. We’re 50/50 selling and financing properties,” Ehlinger says, “but this is a hybrid of the two. We have a good relationship with the lenders, Northwestern and New York Life.” While often these loans are securitized, many lenders do intend to hold on to them. It was suggested that the partnership will hold on to the loan, following their lending pattern, but Ehlinger did not wish to go on record with a speculation as to their plans.

The loan was “essentially, but not strictly so, a 10-year loan, so it has over eight years to go,” Ehlinger explains. “It has amoritized to $181.3 million over the last two years.” While he would say there was likely an assessment done at the time the loan was created, he relates it would be hard to say with certainty what amount was decided upon in such an assessment. He also reports that there has been a recent assessment of the property, but is not at liberty to disclose an amount.

The building is currently 100% leased. Its tenants include PricewaterhouseCoopers, American Home Assurance Co. (a subsidiary of American International Group) and Bank Hapoalim. The tower is 50-stories high and consists of 960,000 sf of office space.