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The owners of 60 Wall St. yesterday announced they refinanced the office tower’s $575 million mortgage at a substantially higher interest rate, paving the way for redevelopment of the empty building with a distinctive public lobby.
“60 Wall will be redeveloped to today’s standards and will redefine the standard of redeveloped assets in the Financial District,” Albert Behler, chief executive of Paramount Group, said on a conference call today. The developer owns the building along with Singapore’s sovereign wealth fund.
The $250 million project, now underway, is a big bet that tenants will lease space downtown even though there are plenty of options nearby. Vacancy rates in the Financial District are 27.6%, according to Colliers, and newly freed-up office space at 55 Water St., 14 Wall St. and 180 Maiden Lane have contributed to the tumbleweeds vibe of the neighborhood.
Those risks explain why the new mortgage for 60 Wall St. comes with an elevated interest rate.
A $259 million slice of the five-year mortgage carries a 12% interest rate and is a payment-in-kind loan, meaning if the landlords choose not to make a monthly payment then the unpaid obligation is added to the balance of the loan. PIKs are risky because they allow borrowers to add more debt to their balance sheets and avoid paying their interest obligations in the short term.
Another $316 million piece of the $575 million loan has a floating interest rate of 7.8%, the same as the mortgage Paramount and its partner defaulted on in May of 2023. It isn’t clear which lenders originated the revised mortgage; the previous loan was written by German lender Aareal Capital.
Deutsche Bank moved out of 60 Wall St. in 2021 and the building has been vacant since.
Renovation work has begun and the exterior and interior will change at the 47-floor, 1.6 million-square foot tower developed in 1989 for JPMorgan.
Paramount plans to install a new glass facade to envelope the lower floors and a grand staircase in the lobby, which offers direct access to the subway and is a privately owned public space. The lobby is filled with white marble columns and the room is one of the largest covered public spaces in the city, delivering what urban planner Jerold Kayden called “overtones of a New York City white-tiled subway station or a stage set for an English garden.”
“There is no way to come out of the subway and not have an emotional reaction to the lobby, whether you think it’s ridiculous, amazing or awful,” said Liz Waytkus, executive director of Docomomo US, a nonprofit dedicated to preserving modern buildings.
The new owners are planning to gut the old lobby, which was designed by architect Kevin Roche who also designed the landmarked Ford Foundation atrium. Sarah Carroll, chair of the Landmarks Preservation Commission, said it wasn’t clear 60 Wall’s postmodern work was worthy of protection in part because it’s not that old and sometimes the public benefits of privately owned public spaces, or POPS, must be subordinate to the plans of private developers.
“In support of larger citywide priorities including economic revitalization, it may be necessary to alter the interior design,” Carroll said in a letter last year to City Council member Christopher Marte.
For its part, Paramount Group said it will create “a state-of-the-art building for tomorrow’s tenants” designed by Kohn Pedersen Fox. A brochure reads: “This isn’t your dad’s Wall Street. This isn’t your dad’s 60 Wall Street, either.”
Revamping the building interior might appeal to tenants who like new lobbies, but Waytkus wonders how persuasive a selling point that would be considering many older Midtown buildings have already created spiffy new public spaces.
“You’re going to destroy something special,” she said.
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Aaron Elstein , 2024-05-02 19:53:38
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