Blackstone refinances debt for luxury New York City condo tower
BLACKSTONE is refinancing US$550 million of municipal debt for 8 Spruce Street, a 76-storey residential tower in downtown Manhattan designed by famed architect Frank Gehry.
New York City’s Housing Development Corp (HDC) plans to price the debt on Tuesday (Dec 3) on behalf of Blackstone, which purchased the building for US$930 million from Brookfield Asset Management and Nuveen in 2022.
About US$204 million of the securities are tax-exempt and are issued under the Liberty Bond programme, part of a federal economic package approved in 2002 to help lower Manhattan recover from the 9/11 terrorist attacks.
The initiative allocated US$8 billion of tax-exempt financing, with the biggest chunk – US$3 billion – going to developer Larry Silverstein to rebuild the World Trade Center site. Goldman Sachs and Bank of America also used the programme to finance the construction of their New York City headquarters.
Bank of America is the lead manager of the bond sale. Its spokesperson declined to comment.
8 Spruce, formerly known as Beekman Tower and later rebranded, was built by Forest City Ratner, a real estate development company. Forest City received approval to issue Liberty Bonds in 2008 and the building opened in 2011.
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The Liberty Bonds were previously refinanced in 2014. Those securities were issued as interest-only, with that period ending in November 2024, according to a memo from NYC HDC.
Standing 264 metres high, 8 Spruce is known for its rippled stainless steel and glass exterior with floor-to-ceiling windows. The building has 900 units, including two units reserved for Gehry, whose most famous works include the Guggenheim Museum Bilbao in Spain and the Walt Disney Concert Hall in Los Angeles.
Individual units include Douglas fir cabinetry, wine fridges and sweeping city views. Residents also enjoy an outdoor sundeck, screening room, golf simulator, indoor pool, and fitness centre complete with a sauna, yoga room and spin studio.
A Blackstone spokesperson said: “Frank Gehry’s 8 Spruce Street is an iconic building that offers its residents unique amenities at their doorstep.
“The significant demand for this refinancing reflects the high-quality nature of the property.”
As at August, the building was about 97 per cent occupied with an average monthly base rent of US$6,015, according to Moody’s Ratings. The tower, which was appraised by the city at US$802 million, received a 20-year tax abatement.
New York City’s housing agency is issuing the bonds as fixed-rate debt with multiple classes, similar to the way commercial mortgage backed securities are structured.
Three classes of taxable debt have higher payment priorities than the tax-exempt Liberty Bonds. Moody’s rates five classes of debt with grades ranging from Aaa to Baa3. The sixth class of securities is unrated. All the bonds mature in 2031.
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