NEW YORK CITY — Africa Israel USA has completed the refinancing of Manhattan's Times Square Building. The approximately $267 million loan carries a 5-year term. The restructuring involved several steps. First, Africa Israel settled the property's $237 million mezzanine debt with a group of lenders made up of BlackRock, CIT Lending Services Group, Five Mile Capital and Column Financial. In addition, it secured a 5-year extension of its senior debt. Finally, more than $70 million in guarantees were eliminated, which took the entire project off-balance sheet. Jonathan Geanakos of Houlihan Lokey advised Africa Israel in the transaction.
As part of the deal, Five Mile Capital Partners will convert its existing debt on the property into a 50 percent equity stake. The restructuring also stands to provide a $370-million equity write-back to Africa Israel. The company also procured a revolving line of credit with Banco Inbursa SA that will allow it to complete its longstanding plan to reposition the former headquarters of the New York Times.
When the company first purchased the property, located at 229 W. 43rd St., in 2007, it planned to convert it into 622,000 square feet of office space and 128,000 square feet of retail space. With the refinancing comes a new plan. The amount of retail space will be more than doubled to approximately 245,000 square feet. Deals have already been reached for more than half of that space, with Discovery Times Square Exhibitions leasing the sub-lower, lower and ground floors, and Bowlmor Lanes taking the third and fourth floors.
Africa Israel is also in talks to bring a luxury hotel to floors five through 11 of the building. The hotel could contain as many as 397 rooms as well as a spa, a gym with a pool, a restaurant and other amenities. The top four floors of the property will be redeveloped into approximately 26 luxury residential condominiums. The company will also market the building's rooftop signage rights.
“The Times Square Building has a lot going for it, and we are going to play to its strengths,” said Richard Merin, chairman and CEO of Africa Israel USA, in a statement. “We have the best location and size for retail entertainment and hotel uses, plus we have a veritable chateau on top of the building that we can transform into a limited number of spectacular residential condominiums. With our financial restructuring complete, we are moving forward to fulfill our new plans and deliver a building that recaptures its value and exceeds expectations.”
The construction timetable was not released.
— Coleman Wood