Five Times Square To Be Sold; Deutsche Bank Plans To Sell 60 Wall St.

When we were children we wanted to own Boardwalk and Park Place. Today we’re more interested in a slice of Park and Madison avenues. I’ll add Times Square and Wall Street to our grown-up board game, judging by the breaking news in both places.The Sun has learned that Boston Properties has entered a contract to sell its 37-story, 1.1 million-square-foot, Class A office building at Five Times Square, built in 2002. The buyers may hail from Dubai. The property serves as the headquarters for Ernst & Young, and its retail tenants include the Disney Store, Red Lobster, and Champs Sports. The property is being sold for $1.3 billion, or $1,181 per square foot, probably the highest price paid per foot for an office building in America.Deutsche Bank is planning to sell its 50-story, 1.6 million-square-foot office building on Wall Street in a sell/leaseback deal. Plus, just blocks away, New York University has retained an investment manager to sell two of its buildings on Trinity Place: 88-92 and 96-102 Trinity Place.True, I still love to play Monopoly the board game: It offers the vicarious thrill of getting rich quick. Players compete to acquire wealth through stylized economic activity involving the buying, renting, and trading of properties.Investors, bankers, and others involved in every aspect of the real estate in this area will be attending “An Evening of Monopoly” hosted by the New York University Real Estate Institute on November 14th. Based upon the record sales for the first 10 months of the year, many investors prefer playing their own brand of real-life Monopoly.So, as they say in the board game, do not pass “Go.” Do not collect $200. Just read on:Earlier this year Boston sold its 1.18 million-square-foot office building at 280 Park Ave. for $1.2 billion, or $1,018 a square foot. Boston Properties is one of the largest owners, managers, and developers in America. Instead of buying properties, the REIT has been interested in selling some of its prized Manhattan real estate assets.“The market is more heated than I have ever seen,” the global chairman of brokerage at CB Richard Ellis, Stephen Siegel, said. “It is driven by the available capital which is in greater supply than I have ever seen, a vibrant New York City economy, very strong leasing velocity, and real rental growth.”Macklowe Properties is the owner of a number prominent office buildings on Madison and Park avenues. Earlier this month, Macklowe Properties and its 50% partner, SITQ, a unit of the pension fund advisor Caisse de Depot et Placement du Quebec, sold the 22-story, 750,000 square-foot building at 340 Madison Ave., which occupies the block from East 43rd to East 44th streets, for $550 million, or $733 a square-foot to real estate investment fund Broadway Partners.Earlier in the year, Broadway Partners purchased the 23-story, 254,000 square-foot office building at 660 Madison Ave. for $215 Million, or $846 a square-foot. This May, this fund purchased the 23-story, 595,000 square-foot former JP Morgan Chase Building for $420 million, or $705 a square foot. Morgan Stanley signed a lease for the entire building in June, and is expected to purchase the building from Broadway next year.A number of office properties are trading on Madison Avenue. In June, SL Green Realty Corp. sold the 22-story, 112,000 square-foot building at 286 Madison Ave. and the 37,000 square-foot building at 290 Madison Ave. These two buildings were purchased by APF Properties, headed by Kenneth Aschendorf and Berndt Perl, who paid $63 million. SL Green acquired these buildings in 1999 when it purchased four buildings from Reckson Associates Realty for $84.5 million.Early next year, SL Green will assume ownership of five office buildings in Manhattan owned by Reckson Realty when the two companies merge. These buildings include 1185 and 1350 Ave. of the Americas, 919 Third Ave., 810 Seventh Ave., and 120 W. 45th St. This summer, APF purchased the 110,000-squarefoot office building at 24 W. 57th St. for $69 million. In September, APF Properties sold the first building it purchased in 1995 located at 601 W. 50th St. They sold the property to its current single tenant, Kenneth Cole Productions. Kenneth Cole paid $24 million for the property on West 50th Street and Eleventh Avenue. APF bought the building in foreclosure from Mutual Life Insurance Company of New York for $4 million.In March, the 23-story, 98,000-square-foot office building at 152 Madison Ave. was sold for $92 million.The Sun has learned that a number of other office buildings are on the market. The include the 16-story, 61,500-square-foot building at 424 Madison Ave., whose retail tenant is North Fork Bank. Also on the market is a 42-story, classic office building a few blocks from this site.One of the most active investors in 2006 is L&L Holdings. Earlier this month, L&L, with an affiliate of General Electric Pension Trust, purchased the land-marked, 29-story, 855,000-square-foot at 2 Park Ave. The joint venture paid $450 million or $526 a square-foot to the German fund SEB Immobilien-Investment Gmbh. According to trade sources, the new owners have retained an investment banker to recapitalize or resell the building, which is expected to fetch more than $550 million.In September, L&L Acquisitions and its joint venture partner GE Asset Management sold an undisclosed stake in the 42-story, 493,860 square-foot office building at 600 Third Ave. The purchaser is BlackRock Realty who paid $315 million or about $600 a square foot.L&L Properties will retain an interest in the building. The building was originally purchased in September 2004 when the joint venture paid $212 million, or $405 a square-foot, to Sumitomo Life. Earlier this month, it sold a 98% stake in the 260,000-square-foot office condominium in the 78-story office and residential condominium building Metropolitan Tower at 142 W. 57th St.The office condominium was sold for about $196 million from BlackRock Realty Advisors, acting via its Diamond Property Fund. L&L purchased the condominium from Pacific Eagle; the American investment arm of Hong Kong-based Great Eagle. It bought the property from Macklowe Properties in 1996 for $60 million.Before the end of the year, Macklowe Properties is expected to acquire the $300 million preferred equity stake held by Jamestown in the 1.9 millionsquare-foot General Motors Building at 767 Fifth Ave. Macklowe acquired the building in October 2003 for $1.45 billion from a joint venture of Donald Trump and Conseco. According to the trade, this transaction would value the building at about $3 billion. Earlier this year, Macklowe Properties paid $440 million to Host Marriott, the owners of the Drake Hotel at 440 Park Ave.Industry leaders expect the 30-story, 535,700-square-foot office building at 350 Park Ave. to be sold. The 46-year-old property is expected to fetch close to $500 million.“The primary reason for all these sales are the influx of capital seeking real estate investments from around the world,” the president of the City Investment Fund, Thomas Lydon, said. “The returns from real estate have far exceeded other asset classes over a three- to five-year period in both the public and private sectors. As a result, increased allocations from institutional players are fueling the desire to invest this capital in prime locations in New York City.”One real estate investor who has practicing the game of monopoly in the buying and selling of commercial office buildings for the two decades is Murray Hill Properties. This year the company has been selling some of its prized Manhattan properties. This summer, Murray Hill and its investors sold the 23-story, 800,733-square-foot former Sports Illustrated Building at 135 W. 50th St. to UBS Bank for $300 million.The investment partnership purchased the building, which is subject to a ground lease in July 2004, from the estate of Dr. Laszlo Tauber for $160 million. In July, Murray Hill Properties, David Werner, Westbrook Partners, and a Canadian pension fund sold the 911,000-square-foot, 450 Lexington Ave. atop the Grand Central Post Office. The joint venture sold the building subject to a 98-year land lease for $600 million to Dubai-based Istithmar.Murray Hill and its partners acquired the building in June 2005 for $450 million from the Shorenstein Co., which purchased it in 2003 for $300 million.Investors from Dubai are very interested in owning property in New York City. Reinforcing its portfolio of high-profile assets in the hospitality sector across the globe, Dubai’s leading alternative investment house, Istithmar, announced two weeks ago the acquisition of the land-marked 270-room W Hotel Union Square for approximately $285 million, or $1.055 million a hotel room. The purchase of the W Hotel marks Isithmar’s fifth consecutive acquisition in Manhattan.Earlier this year, it purchased the 316,000 square-foot, 6 Times Square, the former Knickerbocker Hotel. It plays to convert the building back to a hotel. As reported this week, Isithmar paid $300 million to the seller, a partnership of the Sitt family and Jeffrey Sutton, who purchased the property in 2004 from SL Green Realty Corporation for $160 million.Istithmar purchased the empty lot adjacent to the property for $76 million, or $422 a developable foot. As I reported early in May it purchased 280 Park Ave. In November 2005, Istithmar made its first New York City acquisition by acquiring the land-marked 1.2 million-square-foot Helmsley Building at 230 Park Ave. It paid $705 million, or $587 a square foot.“A huge vote of confidence is the incredible appetite of Dubai of the United Arab Emirates whose mandate is to purchase Class A assets in the United States during the next decade,” the director of Eastern Consolidated Properties, Alan Miller, said. “Dubai, which tried to gain control of our ports, but was unsuccessful, has been on a wild spending spree. No one seems to be able to compete with them as they can purchase properties with extremely low returns and hold assets until there is heavy turnover in the future.”If you think the team from Dubai is active, just look at BlackRock Realty, which last week agreed to pay, with its partners Tishman Speyer and Calpers, Peter Cooper Village and Stuyvesant Town for $5.4 billion.A few months ago, BlackRock and Calpers purchased the 115-unit rental apartment building the Wellington at 200 E. 62nd St. for $173 million. In September 2005, BlackRock Realty, Mann Realty Associates, and Calpers paid $97 million, or $408,000 a square foot to Rudin Management for the 238-unit rental apartment building built in 1955.“The most recent sales in New York City that have been making the headlines have a certain common theme. They are all extremely well located properties which, with new management, infusion of capital, and a good business plan, have significant upside potential in the near and mid-term,”the chairman of the national real estate practice of Greenberg Traurig, Robert Ivanhoe, said. Properties such as 425 Park Ave., 350 Park Ave., and even 340 Madison Ave. have similar characteristics, though in an office building context. They have unrealized upside potential”Mr. Lydon said: “Peter Cooper Village and Stuyvesant Town is a good example of institutional investors seeing an opportunity to invest core allocations into a property that is considered very safe, that may have an undefined upside over the long term to be unlocked byTishman Speyer. Very few opportunities come to market that enables these type of investors to efficiently place these large amounts of equity at one time.”Israeli-based Brack Capital Real Estate has been very active. In March, it purchased the 293,000-square-foot residential rental apartment building at 240 E. 27th St., also known as 463-479 Second Ave. The building includes 324 rental apartments, a 7,000-square-foot Duane Reade, and 200 public garage spaces. Brack purchased the property for $158 million from the original owner and builder of the building.The Sun has learned that Brack is in contract to sell the building more than $200 million. Not a bad profit for a nine month investment. Over the past 24 months Brack has purchased a number of other properties including the 19-story, 268-unit residential rental apartment building at 230 Riverside Drive and the 26-story, 238-unit apartment hotel, the Olcott, at 27 W. 72nd St.The flagship location of Charles Scribner’s Sons bookstore was built in 1913 and located at 597 Fifth Ave. In 1984, Scribner was acquired by Macmillan and sold its renowned Fifth Avenue bookstore. This summer, the 65,572-square-foot building, and the adjacent 12,335 square foot building at 3 E. 48th St. were sold D. Louai Alassar’s A&A Acquisitions for $79.1 million, or $1,015 a square foot.Robert Ivanhoe said: “This is a very different kind of sale than we were seeing over the last few years, where properties that were fully leased to good tenants achieved unexpected prices due to cap rate compression and the enormous profits that developers could realize on the sale of these assets after a successful repositioning. The current market activity is about redevelopment and achieving the highest rents available in great locations through a smart repositioning and redevelopment strategy. Time will tell if the market will hold long enough for the buyers to achieve their goals, but, at present, there appear to be few clouds on the horizon.”Looks like investors will continue to play Monopoly for many years to come. I have to agree with Alan Miller when he says “2005 was a great year for the real estate industry as a whole, especially in New York City, where we will surpass that success with an even greater amount of investment sales for 2006.”Mr. Stoler is a television broadcaster and senior principal at a real estate investment firm. He can be reached at mstoler@newyorkrealestatetv.com.

Five Times Square To Be Sold; Deutsche Bank Plans To Sell 60 Wall St.

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