 |
Shorenstein to Buy New York Tower for $320 Million, People Say
By Elizabeth Hayes - Bloomberg Journal
June 18, 2002 -
Shorenstein Co. agreed to buy a 40-story office tower in midtown New York for about $320 million, said people familiar with the situation, the third-largest real estate transaction in the city this year.
The San Francisco-based real estate investment firm is buying 450 Lexington Avenue a month after billionaire Marvin Davis backed out of an agreement to acquire the skyscraper for $335 million. The seller is a Royal Dutch Petroleum Co. pension fund.
Demand for real estate is being spurred by low interest rates, helping investors weather a drop in rental income brought on by rising vacancy rates. More than $2.8 billion of New York properties have sold this year, including the Empire State Building.
Acquisitions are ``being fueled by an abundance of low-cost capital the likes of which hasn't been seen in this market for quite some time,'' said Richard Baxter, a property broker at Insignia/ESG. ``There's 50 (investors) chasing every deal.''
Officials at San Francisco-based Shorenstein didn't return calls for comment. A spokeswoman at Eastdil Realty, which Royal Dutch hired to sell the tower, didn't immediately return a call for comment, nor did a spokesman for Royal Dutch in New York.
Shorenstein is using some of the $600 million it raised last year for a real estate fund to acquire 450 Lexington. The company, headed by Douglas Shorenstein, owns 25 million square feet of property worth about $5 billion, including Chicago's Prudential Plaza and San Francisco's Bank of America Center.
Philadelphia Purchase
Shorenstein on Monday completed its purchase of Philadelphia's 58-story Two Liberty Place for more than $200 million, said a person familiar with that transaction.
Royal Dutch put 450 Lexington, which is next to Grand Central Terminal and is fully occupied by tenants such as law firm Davis, Polk & Wardwell, and three other office towers around the country up for sale last year.
Davis agreed to buy the building in November, though had trouble securing terrorism insurance at an affordable price, according to the New York Post and other papers.
Today, the U.S. Senate passed legislation to provide a government backup to insurance companies in case a future terrorist attack brings large claims, which real estate groups call an important step in making terrorism insurance more available.
The only bigger office building transactions than 450 Lexington to take place in New York this year are the sale of 1290 Avenue of the Americas to Jamestown for $745 million, and SL Green Realty Corp.'s purchase of 1515 Broadway for $483.5 million.
|
