Lehman to Sell Manhattan Park Avenue Tower to RXR Venture

Lehman Brothers Holdings Inc. has a tentative deal to sell 237 Park Ave., a 21-story office tower near New York’s Grand Central Terminal, to a joint venture including Scott Rechler’s RXR Realty LLC.

Rechler is teaming with Walton Street Capital LLC, a closely held real estate investment firm based in Chicago, according to a statement from the buyers. The group agreed to pay about $800 million for the 1.25 million-square-foot (116,000-square-meter) property, said a person with knowledge of the deal, who asked not to be identified because the negotiations are private.

The deal would continue Lehman’s selloff of real estate that began as it was negotiating its emergence from the biggest bankruptcy in U.S. history. In November, it agreed to sell the assets of Archstone Inc., an apartment landlord, to Equity Residential and AvalonBay Communities Inc. for $6.5 billion.

“Two years ago, we tried to buy the debt on it, because we saw it as a real value-added opportunity,” Rechler said in a telephone interview. “This gives us the opportunity to reposition it and bring it to the stature that it deserves based on its location on Park Avenue adjacent to Grand Central.”

Rechler Purchases

For Rechler, the second-biggest buyer of New York office properties since 2009, the purchase would give him two towers across the street from one another just northeast of the regional rail hub. Last year he bought the leasehold on 450 Lexington Ave., a 40-story building across East 45th Street from 237 Park Ave., for $688 million.

Last month, RXR agreed to buy a 99-year leasehold interest in 75 Rockefeller Plaza, a 33-story skyscraper completed in 1947. That tower, the final building constructed as part of Rockefeller Center, is to be vacated next year in anticipation of a top-to-bottom renovation.

The pending sale of 273 Park Ave. was reported earlier today in the Wall Street Journal.

Kimberly Macleod, a Lehman spokeswoman, said she couldn’t immediately comment.

The building is 80 percent occupied, according to the statement. Tenants include Credit Suisse Group AG, whose lease on about 270,000 square feet expires in 2014, and the advertising firm J. Walter Thompson Co., whose 270,000-square-foot agreement expires in 2016, data compiled by Bloomberg show.

Broadway Partners purchased the tower with financing from Lehman as part of a $5 billion, 10 million-square-foot portfolio in 2007, as real estate values were peaking. The lender took control of the property in 2011, according to Bloomberg data.

The tower has about $420 million of performing senior debt that is part of a commercial mortgage-backed security, maturing in 2017, with a fixed interest rate of 6.27 percent, according to data compiled by Bloomberg.

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