Blackstone Group LP, whose Equity Office unit owns almost 200 U.S. properties, agreed to buy Park Avenue Tower in New York for about $750 million, said three people with knowledge of the transaction.
The seller is San Francisco-based Shorenstein Properties LLC. The 615,850-square-foot (57,200-square-meter) building is located at 65 E. 55th St. in midtown Manhattan, the area with the most-expensive U.S. office rents.
Law firm Paul Hastings LLP, which leases 16 of the building’s 35 floors, is vacating when its agreement is up in 2016, giving Blackstone the opportunity to raise rents when it finds a new tenant, said two of the people, who asked not to be identified because the deal is private. Another occupant, hedge fund Davidson Kempner Capital Management, also plans to move, creating a second potential source of higher rents, they said.
Peter Rose, a spokesman for New York-based Blackstone; Tim Gallen, a Shorenstein spokesman; and Arielle Lapiano, a Paul Hastings spokeswoman, declined to comment. A telephone message left at Davidson Kempner’s office wasn’t returned.
Eastdil Secured LLC was the adviser on the transaction, which was reported late yesterday by the New York Post.
Blackstone in 2007 was set to acquire Park Avenue Tower as part of its $39 billion purchase of what was then known as Equity Office Properties Trust. Simultaneous with that deal’s closing, the company arranged for Equity Office to sell Park Avenue Tower and six other New York buildings to developer Harry Macklowe for about $7 billion.
Macklowe was forced to hand back the properties to lenders during the credit crisis and Shorenstein acquired the building for about $625 million in 2008.
The building’s original developer, George Klein of Park Tower Realty, will retain a small stake, said the people with knowledge of the Blackstone deal.
Chicago-based Equity Office owns stakes in about 70 million square feet of office buildings throughout the U.S., including in New York, Boston and Northern and Southern California. Blackstone has been selling some properties in the unit as the commercial real estate market strengthens.
At the same time, Blackstone is buying office buildings where it sees potential for gains through new leases or property improvements. The firm in September acquired the Hughes Center complex in Las Vegas for $347 million in a bet on growth in Nevada’s economy.