Two Grand Central Tower Sold for $401M

Two Grand Central Tower in New York, which went to market in June of this year expecting a sale price of $370 million, sold this month for $401 million according to a National Real Estate Investor article. The tower was sold by a joint venture between Boston Properties, Goldman Sachs and Meraas Capital, which is controlled by Dubai's ruler, Sheikh Mohammed bin Rashid. The unnamed buyer assumed $176.6 million of mortgage indebtedness according to the REIT.

The 667,000-square-foot building at 140 E. 45th St. was developed in 1982 and later sold by Harry Macklowe. The joint venture originally purchased the property in 2008 from affiliates of Macklowe Properties as part of a $705 million deal that also included 540 Madison Avenue in New York City.

During an Earnings Call, Boston Properties' Douglas T. Linde commented on the sale of the property saying:

"The office mark-to-market is still getting stronger, about a positive $1.41 per square foot. It was nice to be able to announce today in our supplemental aspect that we actually closed our sale of Two Grand Central. I would say I was a little gun-shy, given what our experience was with the New Jersey sale or lack of sales for the last couple of quarters. But we sold the building for $400 million, $617,000 a square foot. And if you look at the supplemental information for the third quarter on an annualized basis, the income is $13.9 million. But the building, again, is only 74% leased. So you can do the math and figure out what the conical cap rate is if you want to think about things in that way.

The sale of this asset was really always a possibility ever since the initial acquisition. To be truthful, and I think a lot of you acknowledged this and commented to us, the building has a very different market position and leasing profile than the other portions of our New York City portfolio. And was distinct enough from that portfolio, that we just came to the conclusion that there was very little synergy to owning the building. And so we sold it when the time was right."

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