Sales of Manhattan commercial buildings dwarfed those of other U.S. cities in the first seven months of the year, with Manhattan exceeding its nearest competitors in other large metropolitan markets by $6.1 billion in total sales volume and and $222 per square foot in sales price, according to a report released yesterday by Transwestern.
The survey with data the firm crunched alongside Real Capital Analytics found that Manhattan stayed atop the nation’s strongest urban core investment sales markets, producing 107 transactions for $11.2 billion in total sales volume at average rates of $770 per square foot in the first half of 2014 after its sales paced those of the country last year as well, said Transwestern researcher Palak Raval.
Two Manhattan hotels owned by New York-based Ark Partners have been transferred to special servicing, according to data from Trepp and Real Capital Analytics.
The $19 million loan for the Mansfield Hotel, at 12 West 44th Street, and the $33.9 million loan for the Shoreham Hotel, at 33 West 55th Street, were moved to an unspecified special servicer last month, according to data from the real estate analytics companies.
On the Market
On the heels of a report that Fortress Investment Group LLC is close to buying Stuyvesant Town-Peter Cooper Village for about $4.7 billion, commercial real estate finance specialists are wondering how the suitor can finance the deal. After all, the last time the behemoth housing complex was sold, things didn’t go so well.
Fortress is reportedly looking to bring in equity partners in the planned purchase, which Bloomberg News first reported on Wednesday. Stuyvesant Town, which occupies 80 acres and holds 11,231 apartments in 110 buildings, is the largest rental complex in Manhattan.
The Sacony-Mobil Building, a 1.7 million-square-foot office tower at 150 East 42nd Street is on the market, according to Bloomberg News. The building’s owner, Hiro Real Estate, a Japanese investment firm, is asking $900 million for the long-term leasehold.
The building is 90 percent occupied and has two major tenants, Wells Fargo and Mount Sinai Hospital, which each occupy approximately 500,000 square feet. The 42-story tower is located less than a block from Grand Central Terminal.
Commercial real estate data provider Real Capital Analytics has signed a 10-year, 16,282-square-foot lease at 110 Fifth Avenue. Asking rent at the Midtown South building, which is now 100 percent leased, is $65 per square foot.
“Real Capital Analytics is expanding and is now able to plan for future growth over the next several years while containing their occupancy to one floor,” said Adam Ardise, senior vice president of Cassidy Turley, who represented the tenant, in a prepared statement. “After an extensive search, RCA decided to sign at the first property we ever toured, in part because of its great location and in part because of the Stanford White architectural design.”
Norway’s sovereign wealth fund, the Norwegian Government Pension Fund Global, has agreed to acquire a 45 percent interest in Times Square Tower from Boston Properties for $684 million in cash.
The acquisition agreement, signed on September 6, values the entire building at $1.52 billion. Following the close of the sale, Boston Properties will retain management and leasing responsibilities.
Wells Fargo outbid Bank of America, Capital One and TD Bank and reached an agreement to buy a portfolio of ING Real Estate Finance’s 29 U.S loans with a total outstanding balance of $1.6 billion.
When comparing the re-emergence of Europe’s real estate market with how real estate has recovered in the United States, investors and analysts speaking to The Mortgage Observer often pointed out, to use a baseball metaphor, that Europe today is barely in the first inning. Of course, this metaphor would hardly be appreciated in Europe. Nonetheless, it is fitting, given that even overseas, the game is increasingly an all-American one.
Renovation and Repositioning
Earlier this week Vornado Realty Trust reported its first quarter results, with funds from operations, a key metric for judging the performance of real estate investment trusts, falling to $201.8 million, or $1.08 per share, from $348.5 million, or $1.82 per share, over the same period last year.
The decline of over 42 percent is attributable in part to the REIT’s investment in J.C. Penney Co. but does not necessarily represent the REIT’s real estate assets, according to analysts.
Vornado Realty Trust is planning renovations to some of its properties around Penn Station, The Wall Street Journal reported this week. The plans are partially motivated by the desire to attract technology and media tenants to the properties, according to the report.
“We benefit from spillover from the Chelsea and Park Avenue South submarkets, which are flooded by tech firms and workers who don’t wear ties,” Steven Roth, newly named chief executive officer, wrote in a recent letter to shareholders.
Though not a traditional owner-operator, TIAA-CREF has begun to draw the attention of the real estate industry in recent months for a bevy of deals, including its acquisition of a stake in the Frank Gehry-designed building at 8 Spruce Street and a joint venture with Norges Bank Investment Management.
The asset management firm’s steady persistence in the real estate market during the downturn has led to a realization of gains, and recent deals could lead to the redeployment of capital in key markets going forward, said analysts familiar with the firm’s strategy going into 2013.
“TIAA is one of the investors that was pretty active in the depths of the market in 2009 and 2010, and some of those investments have turned into significant home runs,” said Dan Fasulo, managing director and head of research at Real Capital Analytics.
Last fall, a group of lenders—including debt funds, insurance companies and international banks—competed for the $80 million assignment to refinance Lehman Brothers Holdings’ On The Ave Hotel on New York City’s Upper West Side.
Ultimately, the borrower tapped Singapore-based United Overseas Bank, which in the last two years has been behind several large office loans in New York and hotel loans on the West Coast, but which was essentially a newcomer to the city’s hotel lending scene. UOB inked the deal during the same late November week when Bank of China closed a $465.9 million loan on the iconic Plaza Hotel, after having refinanced the Mandarin Oriental Hotel for $170 million earlier in 2012.
For CBRE’s Keith Braddish and Mark Fisher—the two elder statesmen in the firm’s capital markets debt and equity finance division—the more fractured lending environment that has arisen out of the collapse of the CMBS market and the concurrent economic malaise has meant the opportunity to dazzle and shine.
Year in Real Estate
Times of change and uncertainty are always worrisome for investors—fear takes hold, spending is called into question and valuations become unpredictable.
Mix an election season with the impending threat of a potentially devastating fiscal cliff, then throw in a destructive, rogue tropical storm named Sandy, and you’ve created an environment that is not conducive to a stellar business quarter for the commercial market.
However, thanks to tax law-motivated sales and retail—as well as a handful of big end-of-year leasing deals—the fourth quarter ended on a relatively positive note, despite a slowdown in leasing activity.
Brooklyn malls don’t usually come to mind as the city’s highest-grossing commercial real estate. But this year was different, with 5100 Kings Plaza, a k a the Kings Plaza Mall, taking the top spot among citywide sales when it sold for $751 million earlier this month.
It wasn’t just the biggest sale of the year—it was the biggest outright, single-trade sale in Brooklyn ever, according to data provided by Massey Knakal Realty Services.