Two Manhattan Office Towers Sell in $1 Billion Deal
An institutional fund managed by Glendale, California-based American Realty is buying 499 Park Ave., a 300,000-square-foot (28,000-square-meter) property at East 59th Street designed by I.M. Pei & Partners, Hines said today in a statement. Institutional investors advised by JPMorgan Asset Management are buying 425 Lexington Ave., a 750,000 square-foot skyscraper at East 43rd Street, across from the Chrysler Building.
Hines put the towers on the market in February. New York commercial-property transactions are forecast to climb this year as investors globally see Manhattan as a safe place to buy real estate. Brokerage Cushman & Wakefield last month projected sales of $14.6 billion for the first half of 2013, up from $10.8 billion a year earlier.
“You’re not finding global capital and all types of capital participating in every sale in every major market in this country, but you are in New York,” said Tommy Craig, senior managing director of Hines’ New York office. “That only reinforces Hines’ interest in continuing to be very active on both the investment side and development side of our business” in the city.
Craig said he won’t disclose further price information until the deals are completed. The JPMorgan unit is paying about $650 million for 425 Lexington, a person with knowledge of the purchase said yesterday. Hines expects to finish the transactions by late September.
The law firm Simpson Thacher & Bartlett LLP, 425 Lexington’s primary tenant with 595,000 square feet on 26 floors, renewed its lease through 2033, Hines said last month.
By securing Simpson Thacher for the next 20 years, it changed the profile of the bidders “in a meaningful way,” eliminating most of the leasing risk and bringing in institutional investors looking for reliable returns, Craig said. Without the agreement, the building might have been fully vacant in 2018, he said.
At 499 Park, where the bond firm Cantor Fitzgerald LP moved its headquarters after suffering devastating casualties in the 2001 attack on the World Trade Center, lease terminations are “staggered” among smaller tenants, Craig said. Investors responded to the “generational opportunity” to own a modern Park Avenue office building, he said.
The deals were co-brokered by Douglas Harmon, senior managing director at Eastdil Secured LLC, and CBRE Group Inc. (CBG) Vice Chairman Darcy Stacom, with Stacom taking the lead on 499 Park, and Harmon on 425 Lexington.
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