Miracle on the Hudson
Even in a city dominated by outsized skyscrapers (not to mention an outsized president-elect), the new glass tower at 10 Hudson Yards in New York City is something remarkable.
Perched above the Hudson River on Manhattan’s West Side, the 52-storey building was arguably more than half a century in the making. And the US$1.2bn financing package that finally brought it to life was easily IFR’s US Structured Finance Issue of the Year.
Real-estate magnate William Zeckendorf Sr first proposed developing the site in the 1950s. But he was just the first of many to fail to make it work.
It took The Related Group – one of the largest real-estate conglomerates in the US – to transform the property and nudge the heartbeat of New York ever-so-slightly west.
Expected to be completed in 2025 with more than 17m square feet of mixed-use space, the site will be the largest (in terms of square footage) private real-estate development in the US since the Rockefeller Center, according to Moody’s.
“It is helping to modernise a city that needs to be modernised,” said Matt Borstein, global head of commercial real estate at Deutsche Bank, which has led US$3bn in financing at the site.
Deutsche supplied about 70% of the US$900m 10-year senior debt on 10 Hudson, which will not even be the largest building at the property when complete.
Goldman Sachs accounted for the remainder, according to Moody’s.
The two banks acted as joint bookrunners and co-leads on the main CMBS, which packaged two-thirds of the debt – mostly as Triple A rated securities – and achieved some of the tightest pricing levels of the year.
The other US$300m was dropped into four separate conduit CMBS deals to give investors in multi-loan pools the rare chance to buy bonds anchored by such a prestigious asset.
In a novel twist, Deutsche and Goldman also sold US$300m of mezzanine debt to South Korean investors – an insurance company and pension funds – that bought shares in a fund that holds the loan.
And despite a difficult year at the German lender, it committed a further US$1.5bn towards a proposed 1m-square-foot retail centre at the site.
When completed, the site will host dozens of office, retail, residential and cultural spaces, and link up with the popular High Line walkway and a new extension to New York’s subway.
“The ability to be involved in the newest, most innovative, environmentally efficient modern building in New York City is what really makes the transaction super-special,” Borstein said.
“When the client has his most important transaction of the year – maybe in their company’s history – who is that client going to call?” he said. “In this case, we were the phone call.”