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BXP closes $1.2B construction loan for 343 Madison office tower
The $1.2B, four-year loan is expected to cover 60% of development costs, with BXP lining up additional equity to complete the project’s $2B capitalization.
Boston Properties, or BXP, said it has closed a $1.2B construction loan for its planned 343 Madison Ave. office tower in Midtown Manhattan. The project will total 930,000 square feet and the financing is led by Wells Fargo, alongside Bank of America, Bank of New York Mellon Corp., and JPMorgan Chase.
The four-year loan is expected to fund 60% of development costs. BXP said the debt has an initial interest margin of 2.5% over the secured overnight financing rate, with potential for a 25 basis point reduction tied to leasing and construction milestones, and the agreement includes a one-year extension option.
BXP also is assembling the remaining project capital through equity partners. It has a letter of intent for an $80M equity investment from an unnamed partner, representing a 10% interest, with expected closing this quarter, which would help round out the development’s $2B capitalization.
The developer continues work on the 46-story tower, having begun vertical construction last year due to ground-lease requirements with the Metropolitan Transportation Authority. BXP also cited Midtown office conditions, noting a Madison Avenue vacancy rate of 11.5% and 6.8% availability for Manhattan buildings built after 2000, and said Starr will anchor the project with an initial 275,000 square foot lease that has expanded by two floors, while McDermott Will & Schulte signed nearly 150,000 square feet this quarter, bringing the building to 50% preleased, according to Bisnow.