Broad Street Development and KSR Capital Seal $138M Recap for 370 Lexington Avenue

Broad Street Development has closed a $138 million refinancing and recapitalization of 370 Lexington Avenue, a 317,000-square-foot office tower in Midtown Manhattan, Commercial Observer has learned. 

Together with KSR Capital, Broad Street completed the recap through a $28 million investment by the partnership, plus $110 million from Acore Capital, the firms said. This refinancing pays off lender Invesco Real Estate, which loaned Broad Street about $155 million to acquire the property from Japanese investment firm Unizo Holdings, CO reported in 2018.

“We owned this building between 2006 and 2008, and then bought it back in 2018,” Ray Chalme, principal at Broad Street, told CO. “We’ve owned it twice, and now it feels like we’ve owned it a third time, we feel like we’re buying it back because we love the building so much.”

Chalme called the recap “an important new milestone for the property” and highlighted how continuing office-to-residential conversions have helped to push up values in the Class B office market space. 

“We used to have about 12 buildings of competition in the area,” he said. “Now we have maybe five because of all the conversions. The conversions have taken so much of the competition off the market, and quality B assets are in demand more.”

The office property, which has asking rents in the mid-$60s per square foot range, is currently 92 percent leased. Chalme said ownership plans to invest an additional $10 million in tenant amenity, facade, and other capital improvements within the building, to make it more attractive to tenants.

Peter Griesinger from CBRE arranged the financing, while Pat Arangio, Doug Middelton and Jack Stillwagon, also from CBRE, advised Invesco on the transaction. Spokespeople for CBRE, Acore, and Invesco did not immediately respond to CO’s request for comment. 

“370 Lexington Avenue represents exactly the type of investment opportunity we seek — an exceptionally well-located asset with strong fundamentals, leasing momentum, and long-term upside,” Abraham Kassin, principal of KSR Capital, said in a statement shared with CO. “We have tremendous respect for the Broad Street Development team and are excited to partner with BSD and Acore Capital as the property continues to benefit from the resurgence of the Grand Central office market.”

Some of the current tenants at 370 Lexington Avenue include entertainment industry litigation firm Kuhn Law Group and real estate capital markets advisory firm BayBridge Real Estate Capital.

Amanda Schiavo can be reached at aschiavo@commercialobserver.com.