Old ‘Top of the Sixes’ Building Goes to Market

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The New York Sun

Stellar properties up and down Park Avenue are for sale. And everyone wants a piece of Times Square. Despite reports that the city’s economy might be cooling, the sign from the real estate markets is that it’s as robust as ever.

“Based upon the first nine months of the year, I would not be surprised if investment sales of New York City properties will exceed $30 billion this year,” the president and CEO of Cushman & Wakefield, Bruce Mosler, said.

Let’s begin this week’s tour at 666 Fifth Ave. Remember Top of the Sixes restaurant? Now it’s called the Havana Club, one of those rare public venues where you can still enjoy a fine cigar.

So it looks like another building on Fifth Avenue will probably sell for close to $1,100 a square foot. The owners of the 1.5 million-square-foot, 41-story 666 Fifth Ave., owned by TMW Property Funds, have retained an investment banker to market the majority ownership.

The building boasts fantastic retail and there’s a subway stop in the basement. A new owner who changes some things around could probably fetch well over $150 a square foot.

TMW purchased an additional 20% interest in the building a few years ago, increasing its ownership to 95%. TMW, which is advised by Prudential Real Estate Investors, is a closed-end fund operated by two Dusseldorf based insurers, Provinzial Rheinland Versicherung and Ergo Trust.

A joint venture of Tishman Speyer Properties and TMW Property Funds purchased the property for $550 million, or $366 per square foot, back in 2000. At the time of acquisition, Tishman Speyer owned 25% and the remaining interest by TMW.

The tower was built in 1957 by Tishman Realty & Construction, which sold the building in 1988 to Sumitomo Realty. In 1990, Sumitomo purchased the ground lease from Cohen Brothers Realty.

Additional revenue is generated by the Citigroup sign on top of the building. That alone brings in $1 million a year, I’m told.

The former headquarters of ABC, now known as the Financial Times Building, at 1330 Avenue of the Americas, is on the market. The 40-year-old, 480,600-square-foot building might fetch close to $400 million.

Now let’s move to Park Avenue. The 20-story, 929,000-square-foot One Park Ave., built in 1925, is expected to be on the market soon. SEB ImmoInvest paid $242 million for a 75% stake in the building and SL Green retained a 25% ownership interest.

SEB ImmoInvest also owned the 29-story, 855,000-square-foot building at Two Park Ave., which it acquired from Vornado Realty Trust in 2003 for $292 million. In October, a joint venture of L&L Holdings and General Electric Pension Trust purchased the building for $450 million, or $526 per square foot.

The new owners are evaluating options to recapitalize or sell the building, which is expected to fetch at least $550 million. From my vantage point, a return of $100 million on an investment owned for a couple months is not bad at all.

We are experiencing the perfect storm for real estate in the metropolitan region.

“Money is very cheap and plentiful and Manhattan has a large, but finite market of available properties,” the principal of Murray Hill Properties, Norman Sturner, said. “Inflation is still in check, interest borrowing rates are low, corporate profits remain steady, and there is little or no new non-proprietary building construction coming on stream for the next two to three years.”

Another property which is expected to fetch over $1,000 a square foot is the 15-story, 120,875-square-foot, 200 W. 57th St., built in 1916. The building is fully leased and owned by Trump Group from the South African real estate investors who acquired the property in 1980. The Trump Group developed Williams Island in Aventura, Florida.

Last week, Vornado Realty Trust was the winning bidder to purchase the 46-year-old office building at 350 Park Ave., stretching the entire block between 51st and 52nd streets. The REIT agreed to pay $542 million for the 30-story, 537,000-square-foot building, or $1,010 a square foot.

The seller is Fosterlane Holdings, the Atlanta-based investment arm of the government of Kuwait, which acquired the building in 1981 for $161 million.

The building was constructed as the headquarters of the former Manufacturers Hanover Trust, which was merged into Chemical Bank and then Chase Manhattan.

“There are two main reasons why the level of sales is so high. One is the abundant availability of capital on both a debt and equity basis, and the second is that the new pricing thresholds are too tempting for sellers to pass up,” the chairman of Massey Knakal Realty Services, Robert Knakal, said.

Last month, Angelo Gordon & Co. Realty Fund purchased a 160,000-square-foot loft office building at 139 Centre St. in Chinatown from Globix. It paid $55 million, or $344 a square foot, for the eight-story bulling. It plans to spend $24 million to renovate and reposition the building into small office condominiums.

Another property which is expected to come to market in downtown is 14 Wall St., which was purchased last year by Shaya Boymelgreen from Stellar Management.

A 16-story, 235,000-square-foot office building, originally built as a men’s hotel, currently configured primarily for showroom and general office use at 485 Seventh Ave.,at the northeast corner of West 36th St. is on the market with an asking price of $150 million, or $638 a square foot.

According to the trade, an investor group is expected to close before the end of the year on the purchase of 16-story, 239,000-square-foot 469 Seventh Ave. The building is expected to fetch close to $85 million, or $360 a square foot. The present owner purchased the building in June 2002 from SL Green Realty Corp. and Morgan Stanley Real Estate Fund for $53.1 million, or $222 a square foot.

The joint venture purchased the asset in January 2001 for $45.7 million. Near Bryant Park, a 22-story office building built in the 1920s is expected to fetch close to $150 million. The property was acquired by a joint venture earlier this year for $100 million.

Two buildings that will deliver vacant space, prime for conversion to residential condominium, are on the market. A 19-story, 247,000-square-foot building at 1760 Third Ave. occupies the western block front between East 97th to 98th streets, the former Florence Nightingale Health Center. It is being marketed by Massey Knakal Realty Services.

Mr. Stoler is a television broadcaster and senior principal at a real estate investment fund. He can be reached at mstoler@newyorkrealestatetv.com.


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