Making a real estate transaction work on a long term basis involves choosing the right property, making timely renovations and ensuring that financing works in order to make money on the right investment. This means that timely refinancing packages can be just as important as the property itself.
The refinancing of the General Motors building at 747 Fifth Avenue is a classic example of this. According to a recent globest.com report, Boston Properties closed on a $2.3 billion refinancing of the property. Lenders involved in the refinancing include Wells Fargo, Deustche Bank, and Citi.
The new financing includes a fixed rate loan at 3.43 percent and replaces the existing $1.6 billion package that was set to expire in October. The building was originally purchased in 2008 for $2.9 billion. The new package will allow Boston Properties to extinguish other debt that was much more expensive (5.96 percent).
Arranging for financing can have some difficulties that can be resolved by an experienced real estate attorney. A skilled lawyer can use their knowledge of financing regulations help in negotiations as well as with projections that could give other investors pause. An experienced attorney can also help in creating language that could offer additional protections and offer contingencies to protect the property owner.
While this refinancing package is currently the largest for a New York City property, it remains to be seen whether other financial deals will exceed this one. In the meantime, the story exemplifies the need for experienced legal counsel in such projects.
The preceding is not legal advice.