New York City's Human Resources Administration (HRA) signed a 20-year lease for 235,664 square feet at the BankNote building, located at 890 Garrison Ave in Bronx, NY.
The six-story, 410,194-square-foot, class A office building was built in 1911 on 2.4 acres in the Hunts Point section of the Bronx. The HRA deal, along with separate leases signed with Urban Health and the School Construction Authority, bring the building to nearly 98 percent leased.
The deals come on the heels of building owner Taconic Investment Partners' $20 million capital improvement plan, recently completed under the direction of architects Beyer Blinder Belle, which restored the building to historical character while implementing energy efficient windows, a new facade, and upgrades to the building's lobbies, cooling tower, hallways and public areas.
In addition to the capital improvements to the building, the owner has promised nearly $18 million in tenant improvements to HRA to build out its new space. The lease deal was made possible thanks to innovative financing for the large-scale tenant improvements (TI) package. Lance Capital, a pioneer in TI loans, and CGA Capital Corporation, which structures credit-backed financing, arranged the loan for Taconic.
The TI loan, which amortizes over seven years at 4.25%, is not secured by the real estate asset itself, but instead by a portion of the HRA's expected rent flow. Unrated bonds tied to the facility were privately placed with institutional investors.
"A 4.25% rate for TI funding was made possible by focusing on the creditworthiness of New York City, rather than the building’s cost of capital or the security collateral value of tenant improvements," said Richard Podos, CEO of Lance Capital. "We admire what NYC did by reducing square footage, consolidating services and contributing to urban revitalization at the same time, all in a better space," he said. Podos added, "The TI financing is a major development that provides a new tool for borrowers to access a different source of real estate capital by focusing on a tenant's credit in a multi-tenant building,"
HRA will occupy three floors at the horizontally-oriented building when it consolidates three separate offices into what was once home to American Bank Note Company's printing presses, utilized for the production of currency, postage stamps, war bonds and stock certificates. The firm will bring 600 employees and numerous visitors in what will surely be a huge daily boost to local business in the area.
Paul Wolf and Stephen Powers with Denham Wolf exclusively represented building ownership in all three lease deals signed recently at the building. The firm is listing the last remaining space at the building, up to 10,726 square feet on the fifth floor.
Robert Giglio with Cushman & Wakefield represented NYC's Human Resources Administration. John Peters, also with Cushman and Wakefield, represented the School Construction Authority in its 31,901-square-foot lease. Jason Martin with Management Consulting & Controls Group, Inc. represented Urban Health in its 19,669-square-foot lease.