(Corrects building's designer in paragraph 4)

By Matt Tracy

(Reuters) -New York City property developer The Durst Organization sealed one of 2025's largest Manhattan office loans for a landmark Times Square skyscraper on Wednesday, according to Rosenberg + Estis, the law firm that represented the developer.

The family-run property owner closed a $1.3 billion commercial mortgage-backed security on One Five One, a 48-story, Class A office building formerly known as 4 Times Square. The proceeds will go towards funding tenant improvements and capital expenditures, among other uses, according to Rosenberg + Estis.

In the years following the COVID-19 pandemic, which wrought devastation on the U.S. office market, The Durst Organization has brought a diverse range of major new tenants to the building, including social media giant TikTok and financial services firm Nasdaq.

One Five One was designed by architecture firm Fox & Fowle, now known as FXCollaborative, and was previously home to publisher Conde Nast until 2014, and international law firm Skadden Arps until 2020. 

Wells Fargo ( WFC ), JPMorgan ( JPM ) and Bank of America ( BAC ) co-originated the $1.3 billion CMBS. The building was previously financed by a $650 million CMBS and a $900 refinancing provided in 2019 by JPMorgan ( JPM ) and Wells Fargo ( WFC ).

Rosenberg + Estis called the immense package a major milestone for the New York office market's recovery.

"This deal sold the bonds very quickly. It pre-sold, basically," said Eric Orenstein, a member of Rosenberg + Estis's transactions team.

Orenstein said the $1.3 billion ultimately funded was well above the amount originally sought by The Durst Organization.

"There is tremendous demand for Class A assets for well-known sponsors that are well-respected in the community," he added. "It's a good sign for the market generally."

The $1.3 billion loan carries a 5.865% interest rate and matures on August 6, 2030. The financing arrangement was based on an estimated property valuation of $2.3 billion and a loan-to-value ratio of 56.5%.

"Over the last few years, there was a broad pullback from commercial real estate lending, particularly office buildings. But in New York City, the strength of the Class A office market is now undeniable," said Douglas Durst, chairman of The Durst Organization, in a written statement.

"The capital markets are recognizing that reality and showing a renewed appetite for exposure to the sector," Durst added.

Wells Fargo ( WFC ) declined to comment, while JPMorgan ( JPM ) did not immediately return a request for comment.

"The strong reception by the CMBS reemphasizes the strength of the NYC office market for buildings that are highly amenitized, tenant friendly, proximate to transportation hubs and have best-in-class ownership," Leland Bunch, head of capital markets and banking for Bank of America's ( BAC ) real estate structured finance group, told Reuters in an emailed statement.