NEW YORK—Related Cos. and Oxford Properties Group have closed on nearly $1.4 billion in equity investments and debt financing for Hudson Yards. Additionally the firms announced that beauty company L’Oréal USA and enterprise software applications producer SAP have signed leases at the project, joining Coach Inc. as major tenants for the development.
A consortium of investors and lenders will fund the first tower in the development of Hudson Yards. Some investors are also making equity investments in a residential tower on 30th Street and 11th Avenue, which will be a hybrid rental and condominium tower.
The South Tower, a 1.7-million-sq.-ft. commercial tower on the northwest corner of 30th Street and 10th Avenue is under construction and the residential tower on the northeast corner of 30th Street and 11th Avenue is expected to commence construction in 2014. The South Tower is expected to be ready for occupancy in 2015. Equity investors in the first phase of the Hudson Yards include Coach, Inc., Related, Oxford, institutional investors advised by J.P. Morgan Asset Management, and a prominent sovereign wealth fund. Construction financing is being provided by a syndicate led by Starwood Property Trust, which includes member organizations of the United Brotherhood of Carpenters and Joiners, along with Oxford Properties Group.
“The show of confidence from this elite group of investors and lenders is a testament to the strength of Related and Oxford and the compelling development we are creating at Hudson Yards,” Related Cos. CEO Jeff T. Blau said in a statement. “Our diverse roster of global tenants, state-of-the-art infrastructure, grand public spaces and signature residential, retail and cultural amenities make Hudson Yards not only the new heart of New York but ensure it will be a vibrant destination day and night.”
Coach, Inc. has purchased 740,000 sq. ft. for their global corporate headquarters. L’Oréal USA has leased an initial 402,000 sq. ft. for their U.S. corporate headquarters and SAP has leased 115,000 sq. ft. on the very top four floors of the building. With these lease agreements, including expansion space, the South Tower is more than 80 percent committed.
“The Hudson Yards development is at the core of a pioneering new neighborhood and L’Oréal USA is proud to be part of it,” L’Oreal USA President and CEO Frédéric Rozé said in a statement. “Relocating our corporate headquarters is an exceptional opportunity to provide our employees with a workplace for tomorrow and a headquarters that best represents our very creative and innovative company and our mission of beauty for all.”
“In establishing a single flagship New York location, our only goal was to find the city’s most innovative development,” SAP’s co-CEO, Bill McDermott said in a statement. “Hudson Yards showcases the soul and spirit of renewal that will inspire SAP employees, partners and customers to power a better run world and to improve people's lives. We are honored to join with the City of New York and the Related-Oxford team to fulfill the promise of this emerging neighborhood and landmark project.”
Starwood Property Trust led the origination of a $475 million first mortgage and mezzanine loan for the project. Starwood will provide $350 million in funding and the remainder will be contributed by Oxford Properties Group and the United Brotherhood of Carpenters and Joiners. The interest rate floats over LIBOR and the loan matures in four years with a one-year extension option.
The 26-acre Hudson Yars site will accommodate more 13 million sq. ft., including more than 6 million sq. ft. of commercial space. Hudson Yards will be home to 750,000 sq. ft. of retail space with five floors dedicated to premier shops, cinemas, specialty restaurants, markets and bars. The project will also house 5,000 residences and feature a new school and a luxury hotel.