Starwood, Crown Acquisitions Tie Up $175M from Morgan Stanley
Guelda Voien May 5, 2014, 5:17 p.m.
Morgan Stanley provided $175 million in financing to a partnership between Starwood Capital Group and Crown Acquisitions in conjunction with its purchase of 144-150 West 34th Street, according to public records. The three-story Herald Square retail building currently serves as Old Navy’s flagship store.
The loan closed on April 23, the same day as the acquisition, records show. Starwood Capital Group, co-founded and overseen by Barry Sternlicht, bought the retail property from the Kefadilis family’s KLM Construction Corporation for $252 million. KLM initially acquired the building in February 1997.
Morgan Stanley lent a little over $150 million in a permanent mortgage in addition to a second piece, of about $25 million, which was syndicated, a source with knowledge of the deal told Mortgage Observer.
Representatives for Crown and Morgan Stanley declined to comment.
The 77,760-square-foot building is solely leased to GAP, Inc.-owned clothing and accessories retailer Old Navy, which has another six years on its lease, according to data from PropertyShark.
While the lot comes with 30,000 square feet of untapped air rights, leaving it ripe for redevelopment, the partnership may find sufficient upside leaving the retail as it is, as Nicholas Doering-Dorival, vice president at Starwood Capital, noted to the New York Post when the sale closed last month.
“At the current moment, we believe there is considerable upside in the existing retail box,” Mr. Doering-Dorival told the Post.
Marcos Alvarado, senior vice president at Starwood Capital, said the building might eventually be redeveloped, however, in a press release at late last month.
“The investment also provides the flexibility for commercial or residential redevelopment to capitalize on the rapidly rising rents and property values in the submarket,” he said in the statement. Starwood declined further comment through a representative.
The building was constructed in 1900 and last renovated in 1998.