Tishman Speyer and Henry Crown have successfully raised $2.65 billion in the commercial mortgage-backed securities market for The Spiral, a prominent office tower in New York City. This transaction marks the beginning of what analysts predict will be a banner year for the single asset, single borrower (SASB) sector.
The bond, which was priced on Tuesday, features a top tranche with a coupon rate of 5.47%, a source close to the matter told Bloomberg, adding that an additional $200 million in debt will be securitized in future deals, bringing the total amount raised to an impressive $2.85 billion. The building's owners plan to utilize these proceeds to refinance existing debt, allocate funds for tenant reserves, and return equity to sponsors.
This refinancing of The Spiral is not just a standalone event but represents the first transaction in the private-label CMBS market for the year. Its significance is underscored by the looming maturity of nearly $1 billion in US commercial real estate mortgages expected in 2025, according to a September analysis by S&P Global Market Intelligence.
The SASB market is poised for extraordinary growth, with JPMorgan Chase & Co. analysts forecasting a record-breaking $85 billion in annual issuance for the current year. This projection builds upon the momentum from last year, which saw issuance reach almost $70 billion, as reported by Bloomberg News.
The Spiral, aptly named for its distinctive series of terraces and setbacks, exemplifies the type of blue-chip properties that have found favor in securing financing, especially when compared to lower-tier buildings. This trend is further evidenced by recent high-profile transactions, such as the Rockefeller Center - another property in the Tishman and Henry Crown portfolio - which set a record for the largest private-label CMBS bond sale since 2021 when it closed in October. Similarly, the luxury Fontainebleau Miami Beach hotel successfully sold nearly $1 billion of CMBS debt in December.
As the commercial real estate market navigates through a period of significant maturities and refinancing needs, The Spiral's successful bond issuance serves as a promising indicator for the health and potential of the SASB sector. It demonstrates the continued appetite for well-positioned, premium assets in major metropolitan areas, even amidst broader market uncertainties.