RXR Closes $1.65B Avenue of the Americas Acquisition

An affiliate of RXR Realty LLC announced the closing of the $1.65 billion acquisition of 1285 Avenue of the Americas, as well as the long-term lease renewal of more than 900,000 square feet to keep UBS's North American headquarters in the office building. The Real Deal first reported that Scott Rechler's RXR Realty was on the verge of a deal to acquire the 42-story office tower, and reports this week that it partnered on the deal with real estate investor David Werner, according to the Commercial Observer, noting that the duo financed the purchase with $1.2 billion in loans from AIG and Morgan Stanley. AXA Financial Inc. sold the property in partnership with JPMorgan Chase & Co.; AXA first put the tower on the market last fall along with 787 Seventh Avenue, which has since been sold to CalPERS; one source noted that both properties had been "institutionally owned for decades," and would likely fetch around $4 billion because they have "institutional-quality tenants [with] high credit and the in-place market rents are significantly below market."

Located between 51st and 52nd Streets and also known as the Equitable Building, 1285 Avenue of the Americas is a Class-A mixed-use tower featuring office, retail, and storage. RXR Realty plans to upgrade the building's lobby, modernize the elevator mechanical systems and make improvements to the plaza. "We are excited to close on the acquisition of 1285 Avenue of the Americas and simultaneously execute a long-term renewal with UBS," said Scott Rechler Chairman and CEO of RXR Realty. "It is only fitting that one of the city's most prestigious buildings will remain the home to some of the city's most prestigious companies for decades to come." In addition to UBS, the building is co-anchored by law firm Paul Weiss Rifkind Wharton & Garrison LLP in 550,000 square feet and Omnicom Group affiliate BBDO, a marketing and communications firm, in 325,000 square feet.

For more news and information visit Blumberg Partners.

RXR Realty Sells 49% of 61 Broadway, Secures $290M Loan

Uniondale, New York-based RXR Realty announced that it has sold a 49% interest in the $440 million office building at 61 Broadway in New York's Financial District, and has closed on a $290 million mortgage on the firm's interest in the 33-story office property. RXR Realty sold the 49% stake to an affiliate of China Orient Asset Management for $216 million and secured the mortgage from the Bank of China and SL Green Realty. RXR paid $330 million for the 790,000-square-foot building in May 2014 and put it back on the market in September 2015 hoping to sell for $450 million. Prior to RXR Realty's acquisition, Broad Street bought 61 Broadway for $130 million in 2004. Full terms of this month's deal were not disclosed.

"We are thrilled to have China Orient join us as our new partner and are pleased that we were able to create meaningful value by upgrading 61 Broadway and executing more than 100,000 square feet of leases at extremely attractive rents," said RXR Realty Chairman and CEO Scott Rechler in a prepared statement. "We look forward to executing the next level of value creation as we recapture space and release it at higher rents to the dynamic 21st century tenants that 61 Broadway is now attracting."

61 Broadway, also known as the Adams Express Building, was designed by Francis Kimball with an estimated construction cost in 1912 of $2 million. The office building between Rector and Morris Streets was 90% leased at the time of sale, with major tenants including architectural firm Bjarke Ingels Group, securities firm Samuel A. Ramirez & Co., innovation think tank Human Condition Global, and data governance company Collibra Inc. The palazzo-style building offers tenants a renovated lobby, high ceilings and great views, as well as quick access to several transit lines connecting to the talented and growing workforce living in Brooklyn, the rest of Manhattan, Northern New Jersey and the rest of the region.

For more news and information visit Blumberg Partners.

CRE Outlook Forum Voices

EisnerAmper & Bloomberg hosted a business and political perspective breakfast forum this week called "Commercial Real Estate Outlook 2015 & Beyond" in New York, inviting a panel of commercial real estate professionals to discuss the outlook of the economy and its impact on CRE. The panelists included Scott Rechler, CEO of RXR Realty, Joseph Sitt CEO of Thor Equities, Steven Witkoff, CEO of The Witkoff Group, Brian Harris, CEO of Ladder Capital, and Peter Sotoloff, CIO of Mack Real Estate Credit Strategies. GlobeSt.com covered the even in an article titled "The Dealer Has Reshuffled the Deck"; an excerpt follows:

What's driving that economy? asked Scott Rechler, CEO of RXR Realty. In word, "talent." Employers, and therefore office landlords, need workplaces that attract that talent, but that imperative goes beyond the office space and into the surrounding neighborhood. It has changed the dynamic not only of office, Rechler said, "but also how everyone looks at real estate in totality."

Rechler also added on to Sitt's observation about a new hand of cards. The deck is reshuffled at least every year, he said, and everyone needs to be aware of shifts in the market as they occur.

As a case in point, he cited RXR's current strategy compared to the one it pursued a few years earlier. As the downturn evolved into the recovery, the company rode the wave by snapping up attractive properties at attractive prices. More recently, the playing field has become far more competitive and "we're not in an investment market right now."

Asked where development is taking place, Sitt countered that a better question would be where it isn't taking place. Cranes dot the horizons everywhere, even amid rising costs for both construction and acquisition of developable parcels, as CEO Steven Witkoff of the Witkoff Group pointed out. On the other hand, Witkoff added, "I think the market is healthy."

For more news and information visit Blumberg Capital Partners.

JV Buys Fort Greene Office for $195M

A joint venture between RXR Realty and American Landmark Properties announced earlier this month that it had acquired the long-term lease of a large office building at 470 Vanderbilt Avenue, near Barclays Center in Brooklyn. Starwood Capital Group and GFI Development Company closed on the sale of its 75-year ground lease at 470 Vanderbilt for $195 million, according to a CoStar report. The Eastdil Secured investment sales team of Doug Harmon and Adam Spies represented GFI and its partner Starwood Capital Group in the sale.

This week, Meridian Capital Group of New York announced that it had arranged a $142 million mortgage for the purchase of the property. The Eastdil Secured investment sales team of Doug Harmon and Adam Spies represented GFI and its partner Starwood Capital Group in the sale. According to a report in CrainsNewYork.com, this is one of the largest acquisitions in the outer boroughs in recent times and yet another testament to Brooklyn's growing popularity.

"The 470 Vanderbilt Avenue acquisition represents an opportunity for us to buy a building with healthy current returns generated by credit tenants, while also participating in the amazing transformation that is taking place across Brooklyn," RXR chairman/CEO Scott Rechler said in a statement. The deal is RXR's first New York City acquisition as part of its New York Metro Emerging Sub-Market initiative, which focuses on undervalued neighborhoods that are well-positioned geographically and demographically with strong infrastructure in New York City's outer boroughs and suburban downtown districts located around transit hubs.

The 10-story, approximately 650,000-square-foot property was 88% leased at the time of sale with tenants including the City of New York and The League Education & Treatment Center, a 50-year old, internationally-recognized, not-for-profit organization serving children and adults with developmental disabilities. The building is also occupied by media and technology tenants, Aereo and Switchnet, and a state-of the-art, self-sustaining data hub for technology and telecommunications companies.

For more news and information visit Blumberg Capital Partners.

RXR Buying Leasehold at 75 Rockefeller Plaza

RXR Realty has agreed to acquire a 99-year leasehold interest in 75 Rockefeller Plaza, taking control of leasing and management of the 630,000 square-foot tower. According to a Bloomberg report, RXR Realty has positioned itself as a major player in the New York office market, with this transaction bringing their Manhattan portfolio to 6.5 million square feet, all acquired since 2009. "They have been super-active," said Joseph Harbert, eastern regional president of Colliers International, a commercial-property brokerage that isn't involved in the deal. "They seem to be the kinds of guys who want to hold onto these assets and not flip them. They're buying long-term projects."

Late last year, Mohamed Al Fayed, the building's owner, placed 75 Rockefeller Plaza on the market, hiring an investment sales team from Cushman & Wakefield to market the property, offering a leasehold interest instead of an actual ownership stake in the tower. In September, RXR Realty moved into the lead in the auction to take control of 75 Rockefeller Plaza, which would allow the buyer to rent the skyscraper long term, according to a Commercial Observer article. Bloomberg's source noted that RXR has plans to execute a complete renovation that could cost more than $100 million, and would have tenants vacate the building by September 2014 to execute the improvements, which should be completed by the third quarter of 2015.

75 Rockefeller Plaza, also known as the Esso Building and Time Warner Building, was completed in 1947, and at the time was the tallest completely air-conditioned building in New York City. The 33-story skyscraper is fully leased to Time Warner, but the company's commitment there expires in 2014.

For more news and information visit Blumberg Capital Partners.