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October 2010

October 2010 » Market Analysis » NYC Buildings For Sale

October 2010 New York Buildings For Sale


New York City Buildings sold

SL Green, the largest commercial office landlord in New York, agreed to sell 19 West 44th Street in Manhattan to Deka Immobilien for $123.2 million. SL Green will continue to manage and lease the building as part of the sale agreement with Deka. SL Green originally bought the 292,000-square-foot Class B property in 2004 for $67 million. Since the acquisition, SL Green has renovated the lobby, windows and heating and cooling systems, and raised occupancy to 99 percent, compared to 86 percent in 2004.

SL Green Realty is expected to gain $66 million profit on the sale of 510 Madison Avenue. The real estate investment trust owned $280.5 million of senior and mezzanine debt on the property that was paid in full when Boston Properties acquired the building from Macklowe Properties. Boston Properties paid about $316 million, or about $904 per square foot, for the vacant Midtown property.

The Related Companies must return a $510,000 deposit, plus interest, to the Greek shipping executive who bought at the 22-story Brompton condominium on the Upper East Side, in a decision that could have broad implications for developers and condo buyers in New York and nationwide. The Brompton buyers had signed a contract in May 2008 for a $3.4 million three-bedroom unit and later decided to back out, making use of a 1968 federal law called the Interstate Land Sales Full Disclosure Act. Lawyers for the sponsors said the decision could be a death sentence for existing and future new development in the city and intend to appeal.

The Leona M. and Harry B. Helmsley Charitable Trust is looking to reduce its $2.6 billion portfolio by selling stakes in some of the nine Midtown office buildings, including the Empire State Building, that it owns through partnerships with the Malkin family. The buildings are known as the W & H Portfolio. Members of the trust have met for preliminary talks with Malkin, bankers and attorneys, and ideas on the table include creating a public real estate investment trust for the buildings, each of which is currently structured as a separate entity. The 788-room New York Helmsley hotel at 212 East 42nd Street is on the market for sale.

Moody's economists say that the likelihood of a double-dip in the nationwide housing market is high. The tracking firm is pessimistic about the nationwide housing market, and the overall economic conditions spell bad news for a housing comeback.

The potential bankruptcy of iStar Financial could affect several New York properties where foreclosure proceedings are already underway, though it is too early to predict what may happen. As of December 2009, commercial real estate lender iStar had 11.7 percent of its loans concentrated in New York. Trump Soho New York, the hotel-condominium, is one of the projects financed by iStar. The company recently increased its mortgage by $20 million through a restructuring.

Ofer Yardeni of Stonehenge Partners gave the most optimistic assessment among a four-person panel speaking about residential investment in real estate, saying his company was looking to open a $1 billion fund to make property purchases. He added that as a way to begin putting equity in the fund, Stonehenge will sell a few buildings.


David and Jed Walentas, the father-and-son real estate team that heads Two Trees Management, are in contract to buy a $129.5 million Chelsea office building from Joseph Moinian's the Moinian Group. In an off-market deal, the company gave a hard deposit for the 340,000-square-foot loft building at 50 West 23rd Street, next to Home Depot. The acquisition is scheduled to close within the month.

David Bistricer's Clipper Equity and the family-owned Rieder Holdings closed on the purchase of the 197-unit Upper West Side apartment building at 752 West End Avenue from Westbrook Partners for $72.36 million. The purchase of the former hotel built in 1931 is known as the Paris.

An entity affiliated with real estate investor the Wolfson Group paid $56 million for a minority interest in the Midtown office building at 135 West 50th Street, known as the Sports Illustrated building. The Wolfson Group affiliate bought a 43 percent interest in the 23-story building from the Peter Jay Sharp Foundation, a charity named for the former Manhattan hotel developer. The approximately 800,000-square-foot building is owned by a fund managed by UBS Realty Investors, which purchased it in 2006 for $332 million.

Two Manhattan office buildings are slated to emerge from bankruptcy court in the U.K. with buyers by the end of the year. The first, the 258,000-square-foot 100 Fifth Avenue, near Union Square, will go to Invesco for $93.5 million, or $360 per square foot. The second, 183 Madison Avenue, which contains 246,000 square feet on the corner of 34th Street, is being scooped up for $75 million by Peter Armstrong and his Rigby Asset Management, alongside Argentinian fund IRSA.

NYC Buildings For Sale

Almost two years to the day after Lehman Brothers crashed and burned, bringing commercial real estate deals to a near-standstill, the owners of the city's fourth-largest office building have put the property up for sale for what appears close to a pre-crisis price: $2 billion. While that figure far eclipses any other deals in the post-Lehman world of New York City commercial real estate, if any property can bring in that kind of cash, 111 Eighth Avenue may well be the one. The nearly 3 million-square-foot building, which has unobstructed views and 15-foot ceilings, is full of desirable tenants like Google, Nike USA, barnesandnoble.com, Sprint and Armani Exchange. Next year, it is expected to generate a net operating income of almost $100 million.

Vornado Realty Trust may be close to scooping up a 150,000-square-foot retail space in the Lucida condominium at 151 East 85th Street at the corner of Lexington Avenue, with developer Gary Barnett of Extell Development selling off the space. The space is currently leased by Barnes & Noble, Sephora and H&M. The deal also includes 24 rental units. If the deal goes through, the property could sell for upwards of $150 million. The 20-story, 110-unit building, was constructed in 2008.

Stephen Ross is looking to take hold of Joseph Moinian's 1775 Broadway, the distressed, 26-story office tower that once housed Newsweek magazine, and turn it into the city's first Nordstrom department store. Moinian has been struggling to hold onto the building, which he renamed 3 Columbus Circle in conjunction with a roughly $100 million renovation, and was close to restructuring its $250 million mortgage before a venture led by Ross' the Related Companies and Deutsche Bank AG purchased the debt at nearly face value and filed to foreclose.

Boston Properties completed the acquisition of developer Harry Macklowe's troubled office tower at 510 Madison for $275 million. Boston Properties agreed to buy the 350,000-square-foot office tower between 52nd and 53rd streets in August, after buying a junior mezzanine loan from O'Connor Capital Partners.

Seven bidders have signed up for consideration to build the first phase of the massive Hunters Point South, affordable housing complex in Long Island City. The city would not reveal who the bidders were, but the three: AvalonBay Communities, Douglaston Development and a joint venture between Durst Fetner Residential and Jonathan Rose Associates have confirmed that they have thrown their hats into the ring. Prior to last Friday's deadline, L + M Development Partners had also said it planned to submit a proposal. The project's first phase is to have 1,000 housing units and a 1,100-seat school, and the city is expected to choose a developer by early next year.
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