BentallGreenOak Seals Financing for 685 Third Avenue Acquisition

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BentallGreenOak has closed on its acquisition of 685 Third Avenue, a Midtown East office property and the last remaining asset in Unizo Holdings’ Manhattan portfolio, sources confirmed to Commercial Observer. 

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The 31-story office property traded for around $450 million and Heitman provided $200 million of floating-rate leasehold financing in the deal, sources said. The debt works out at around 65 percent loan-to-cost for the leasehold component. 

CBRE’s James Millon, Tom Traynor and Mark Finan negotiated the debt, while CBRE’s Darcy Stacom and William Shanahan marketed the sale. CBRE officials declined to comment. 

As part of the deal, Safehold — a publicly traded REIT — also created a $180 million ground lease on the building. 

The Real Deal first reported that Unizo was in the process of selling 685 Third Avenue to BentallGreenOak for more than $450 million. Commercial Mortgage Alert first reported news of the financing last month. 

The 639,000-square-foot asset — between 43rd and 44th Streets — sits one block from Grand Central Terminal. Unizo Holdings purchased the property in 2017 from Nuveen Real Estate, paying $467.5 million in cash, according to Real Estate Weekly.

The sale of 685 Third Avenue is the final transaction in Unizo’s divestment of its $1 billion Manhattan office portfolio in the midst of an ongoing takeover saga. In November, Unizo was weighing six buyout offers, including a $1.6 billion bid from Blackstone, after fending off a hostile takeover bid from Japanese travel agent H.I.S. Co. in July. But on Dec. 22, Lone Star emerged as a white knight bidder after making a friendly buyout offer that topped Blackstone’s. 

As first reported by CO, Unizo sold 40 West 25th Street to Kaufman Organization and AXA Financial a few days earlier, with the buyers locking down $76 million in financing from Metlife. The CBRE team arranged the financing in that instance, too.

Previous dispositions include 24-28 West 25th Street, sold to Savanna for $110 million in April; 370 Lexington Avenue to Broad Street Development for $190 million and 440 Ninth Avenue to Taconic Investment Partners and Nuveen Real Estate for $269 million, both in September 2018; and 321 West 44th Street to Related Companies for $153 million in October 2018.

Officials at Heitman and BentallGreenOak didn’t immediately respond to a request for comment.