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Shorenstein Deal for 450 Lex
By Lois Weiss - New York Post
June 19, 2002 - SHORENSTEIN is back.
The former leasing and management agent of the Met Life building - Shorenstein Co. - has returned to New York and just signed a contract to purchase the remaining approximately 88 years on the lease of 450 Lexington Ave. for around $300 million, we've learned.
The sellers, Royal Dutch Shell Pension Fund, may have to fork over around $10 million, a source said.
This is the diamond-detailed, 1 million-square-foot pseudo-Art Deco building that Marvin Davis had to give up.
The Davis deal was around $330 million, and he tried to get it for less when it became clear that terrorism insurance would take a dent out of the returns. Since then, sellers Royal Dutch Shell Pension Fund have purchased a one-year terrorism policy for the building that was developed over the U.S. Post Office by Hines and Sterling.
Sources said Shorenstein thought it was down and out after the last round of bidding, but left its money on the table with Eastdil Realty, which was marketing the property.
"They weren't the lead bidder when Davis was in, and they weren't the lead bid on the second go-round," our source rambled on. "But Shorenstein has the funds - and it's discretionary money that can close quickly, and all they do is buy large, Class A office buildings in downtowns."
They are usually prominent ones, too, like the giant John Hancock Building in Chicago.
There also may be a value-added play if Shorenstein can cut a deal with the U.S. Post Office, which owns the building, and has hired Julien J. Studley to see if it can monetize the lease.
The 450 Lex purchase is expected to close in 30 days through Shorenstein's sixth investment fund - formally known as SRI 6. About 35 to 45 percent of the dollars will go in as equity and then will be leveraged with a mortgage. Shorenstein's rep did not return calls.
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