RXR Said to Buy 99-Year Leasehold at 75 Rockefeller PlazaDavid M. Levitt
Scott Rechler’s RXR Realty LLC, one of the most aggressive buyers of New York City offices since the financial crisis, agreed to acquire a 99-year leasehold interest in 75 Rockefeller Plaza, a person familiar with the deal said.
RXR will take control of leasing and management of the 33-story tower, gaining rights to collect rent from tenants, according to the person, who asked not to be identified because the deal is private. The company plans a complete renovation that could cost more than $100 million, said the person, who didn’t disclose the lease-payment terms.
The transaction brings the size of RXR’s Manhattan portfolio to 6.5 million square feet (604,000 square meters), all of it acquired since 2009. The Uniondale, New York-based company is the second-biggest buyer of New York office properties by dollar amount in that time, trailing only SL Green Realty Corp., according to data from Real Capital Analytics Inc., which tracks commercial real estate sales globally.
“They have been super-active,” said Joseph Harbert, eastern regional president of Colliers International, a commercial-property brokerage that isn’t involved in the deal. “They seem to be the kinds of guys who want to hold onto these assets and not flip them. They’re buying long-term projects.”
The 75 Rockefeller Plaza tower is owned by a company connected to the family of Mohamed Al Fayed, 79, the Egyptian businessman who once owned Britain’s Harrods Ltd. The entity will retain ownership of the tower, the person said.
The transaction hasn’t yet been completed and there are certain conditions that have yet to be met, according to another person with knowledge of the negotiations who asked not to be identified because of the transaction’s private nature.
Edmund Tagliaferri, an RXR spokesman, declined to comment on the deal. Al Fayed also declined to comment, according to Kate Lovell, his spokeswoman, as did Nicholas Derasmo, a spokesman for Cushman & Wakefield, the brokerage for the seller.
Leasing the entire property to RXR for 99 years enables the Al Fayed entity to hold onto the building and receive steady income from RXR while someone else takes on the cost and risk of modernizing the building, said Harbert, whose company does business with RXR.
The 630,000-square-foot tower at 75 Rockefeller, the youngest building at the Rockefeller Center complex, is entirely leased by Time Warner Inc. The media company moved out when the Time Warner Center near Columbus Circle was completed in the early 2000s, and sublet the building, including leases to Warner Music Group and NBC Universal.
All will vacate by September 2014, after which RXR intends to reconstruct the interiors and restore the limestone exterior, a city landmark, one of the people familiar with the deal said. The project should be completed by the third quarter of 2015.
RXR is in the process of hiring the architectural firm Kohn Pedersen Fox Associates PC as the designer for the renovation, the person said.
The building, completed in 1947, sits across West 51st Street from the rest of the Rockefeller Center complex, which is owned by Tishman Speyer Properties LP. Its southern windows offer views of the plaza’s skating rink and the Rockefeller Center Christmas tree each holiday season. The tower was built for the Rockefeller-owned Esso Oil Co. and was known as the Esso Building, according to Emporis.com, a website that keeps data on skyscrapers.
While the Sixth Avenue-Rockefeller Center corridor contains some of Manhattan’s best-known skyscrapers, demand for space weakened in the past year. About 423,000 more square feet were put up for lease than were taken in 2012, the second-most “negative absorption” of midtown Manhattan’s 10 submarkets, according to data compiled by Cushman & Wakefield.
A partnership led by RXR acquired the nearby 1330 Sixth Ave., a 40-story tower across from the Hilton New York, in late 2010 for about $400 million. A year later, Rechler paid about $920 million for Chelsea’s Starrett-Lehigh Building, a former freight terminal whose tenants include Martha Stewart Living Omnimedia Inc. That was the biggest single-asset real estate purchase in the U.S. in 2011, according to Real Capital.
In September, RXR paid about $668 million for 450 Lexington Ave., near Grand Central Terminal, according to Real Capital. That deal, like 75 Rockefeller, is structured as a net-lease of the property, city records show.