Chetrit buys stake in NY building
Two investors acquired a 49% stake in the mammoth office building at 450 West 33rd Street in Manhattan after Max Capital Management’s agreement to assume full ownership fell through.
Joseph Chetrit and Ivan Kaufman paid $171.5 million for the stake. The transaction, brokered by Eastdil Realty, valued the 1.7 million-square-foot property at $350 million, or $204/sf.
The property was previously fully controlled by a partnership among Angelo Gordon & Co., Lone Star Partners and Max Capital, which held a nominal stake. In the fall, Max Capital struck an agreement to buy out its partners for $320 million. It retained the law firm Fried Frank help it find an equity partner, while it separately tried to line up debt. Max Capital, which is headed by Adam Hochfelder, talked with a host of potential partners, including Kaufman.
While Max Capital was able to arrange a significant amount of debt, in mid-December it became clear that the firm could not come up with the approximately $20 million of equity needed to complete the acquisition. Angelo Gordon and Lone Star then discussed selling the 49% stake to Kaufman.
Chetrit, who had earlier bid on the entire property, was brought in as a co-investor with Kaufman.
Chetrit and Kaufman invested about $26 million of equity. Additionally, Kaufman and Northstar Capital Partners supplied mezzanine debt totaling $87.5 million. Chetrit and Kaufman assumed leasing and management of the property.
The building’s occupancy rate is 85%, with no lease expirations until 2011. Last summer, Associated Press signed a 15-year lease on 291,000 sf, and Saint Vincent Catholic Medical Centers signed a long-term lease on 105,000 sf. The building offers the potential for a major hike in net operating income in the coming years. The goal is to lease 100,000 sf of street-level space–and potentially another 100,000 sf on the second floor–to a big-box retailer by reshuffling existing office tenants and storage space.
The owners are also awaiting local zoning approvals to add up to 500,000 sf of office or residential space to the property.
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