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.

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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.

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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."

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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.

NorthStar Invests $340M in RXR Realty

NorthStar Realty Finance, a diversified commercial real estate investment and asset management company that is organized as a REIT, has closed a strategic $340 million investment in New York's RXR Realty. According to a NorthStar press release, the investment includes a combination of corporate debt, preferred equity and common stock in RXR which provides NorthStar with an approximately 30% ownership interest in RXR. NorthStar Asset Management will be entitled to 50% of the asset management fees from any capital raised through its distribution network and will be entitled to additional asset management fees through its proportionate ownership interest in RXR.

NorthStar's Chairman and Chief Executive Officer, David Hamamoto, commented, "We are very pleased to partner with such a high caliber, successful and well-known organization like RXR. Given RXR management's track record in both the public and private markets, its high quality real estate portfolio and its growing asset management business, they are a perfect fit for NorthStar, both in terms of further diversifying NorthStar's asset base with trophy properties in New York City, and growing NorthStar's asset management business."

RXR's Chairman and Chief Executive Officer, Scott Rechler, commented, "We are extremely excited to partner with the dynamic and high quality team at NorthStar. We believe that NorthStar's strong balance sheet, deal flow and capital raising capabilities will enable us to more effectively execute our investment strategy in the New York Metropolitan area. NorthStar is the ideal strategic partner for RXR to continue executing on our expansion plans and, in turn, we believe our growth will substantially boost NorthStar's rapidly growing asset management business."

RXR was formed in 2007 by the former management team of Reckson Associates Realty Corp. after it sold Reckson to SL Green Realty in January 2007 for $6.5 billion, according to a CoStar report.

For more news and information visit Blumberg Capital Partners.

One WTC Construction Complete as Tallest Building in the Western Hemisphere

Towering 1,776 feet above the ground, in honor of the year that began the American revolution against British rule and what is considered the start of the modern United States, New York's One World Trade Center met the end of its construction as a tall, heavy spire was hoisted into place today. Installation of the final two sections of the 408-foot, 758-ton spire was completed after pieces of it had been transported to the roof of the building last week. It will serve as a world-class broadcast antenna. The spire makes the building the tallest building in the Western Hemisphere, 47 feet taller than Chicago's Willis Tower, though it is substantially shorter than towers in the Middle East and Asia.

"It's a culmination of a tremendous amount of team work ... rebuilding the New York City skyline once again," said Juan Estevez, a project manager for Tishman Construction, from a temporary platform on the roof of the tower where he and other workers watched the milestone.

"It's going to have a light that you can see from tens of miles away," said Port Authority Vice Chairman Scott Rechler. "And that light will change colors and in the next few months we are going to be activating that light, and it will be a beacon of hope just like the Statue of Liberty."

9/11 Memorial President Joe Daniels watched the spire piece rise Thursday morning from the memorial's office windows overlooking the World Trade Center site. "It's a big milestone in the history of the rebirth of the site," Daniels told NBC News. "This renewal of spirit, to see spring here and this beautiful weather, the memorial fountains and the flag on the spire piece going up. It was one of those things that you won't forget."

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