RXR Realty Takes the Lead in Bid to Buy Leasehold in 75 Rock
Daniel Geiger Sept. 25, 2012, 5:43 p.m.
RXR Realty has moved into the lead in an auction to take control of 75 Rockefeller Plaza several sources familiar with the bidding told The Commercial Observer.
A source who had participated in the bid for the tower told The CO that the price of the deal, which is being structured as a leasehold, had moved to around $17 million per year in the latter rounds of the auction – though it could not be immediately confirmed whether RXR had agreed to pay this price or if the company had advanced to the point where it would close on the deal.
Executives at RXR Realty did not immediately return calls seeking comment. Executives involved in the sale also could not be reached.
75 Rockefeller Plaza was placed on the market earlier this year by the Egyptian billionaire and former owner of the Harrod’s department store empire Mohamed Al Fayed, the 600,000-square-foot tower’s owner. Mr. Al Fayed hired an investment sales team from Cushman & Wakefield to market the property and insisted on offering a leasehold interest rather than an actual ownership stake in the 33-story art deco skyscraper.
A leasehold would allow a buyer to rent 75 Rockefeller Plaza long term, but the structure comes with challenges sources say. The terms of such an arrangement for instance prohibited a conversion of the building’s lower office floors over to hotel use – a gameplan that several bidders had envisioned as a way to profitably repurpose the building’s base floors, which many felt were difficult to lease at the rents necessary to justify the cost of the leasehold.
Mr. Al Fayed, whose son Dodi famously perished with Princess Diana in car wreck speeding away from the paparazzi Paris in 1997, wants to retain the building as a source of enduring income for his family.
It appeared in recent weeks that George Comfort & Sons, owner of Worldwide Plaza, would acquire the leasehold, but sources said RXR Realty has moved ahead of rival bidders to do the deal.
RXR Realty, led by chief executive Scott Rechler, has been one of the most prolific and successful investors in the city in recent years. The company has purchased several buildings, including 620 Avenue of the Americas and the Starrett Lehigh Building, which it bought over a year ago for nearly $1 billion.