Blackstone Lends $540M in Deerfield’s Acquisition of 345 PAS

Blackstone Group provided the five-year, floating-rate loan in a deal negotiated by CBRE (CBRE)’s James Millon, Tom Traynor and P.J. Finley, sources said. The debt facilitates the office building’s purchase from RFR Holding and its upcoming conversion to a life science property. LoanCore Capital funded a portion of the loan at closing, sources said.

The 12-story, 300,000-square-foot block-front building sits between 25th and 26th Streets — steps away from Madison Square Park — and includes retail space on the ground floor. Its loft-style floors each span 26,500 square feet and feature 13- to 20-foot ceiling heights. The property also includes a 8,000-square-foot private roof terrace and a penthouse with a skylight.

CO first reported in May that Deerfield — a health care-focused investment management firm — was buying the Midtown South asset and in the market for a roughly $525 million loan. The building will be the first life science property in the area, and Deerfield will also occupy space in it.

CBRE’s Darcy Stacom ,William Shanahan, Ben Friedland, Jason Pollen,Chris Corrinet and John Isaacs represented Deerfield in the acquisition.

The sale made RFR’s Aby Rosen an investor in a life science fund. In June, sources familiar with the deal told CO that while the cash component of the deal is around $385 million, Rosen also received interest — valued at around $150 million — in one of Deerfield’s life science innovation funds, bringing the true sale price to around $530 million. “Aby is a very smart businessman,” one source said at the time. “He’s got his fingers in many pies.”

Deerfield’s purchase seemingly came out of left field. (“The sale was very much under the radar screen, nobody found out about it until after the closing, which is kind of a miracle in New York real estate,” one source said in June.) But that was largely because RFR’s plan — outwardly, at least — had been to reimagine the property after its previous anchor tenant, advertising agency Digitas, terminated its lease for 250,000 square feet early. As such, RFR was actively seeking a single tenant to replace Digitas and occupy the entire building for a time — but that also meant that the property was vacant and ripe for Deerfield’s soon-to-be planned conversion.  

Deerfield joins other investors in what is a growing trend of life science development and redevelopment in New York City, where a deep talent pool is readily available.

To the property’s east, at 430 East 29th Street, is the 728,000-square-foot Alexandria Center for Life Science campus, owned by California-based real estate investment trust Alexandria Real Estate Equities. The REIT upped its New York City presence last year, buying Pfizer’s Manhattan headquarters for $360 million in July 2018 and paying $75 million for The Bindery Building at 30-02 48th Avenue in Long Island City in October.

Officials at Blackstone, Deerfield and CBRE could not immediately be reached for comment.