Shorenstein buys 2 former Macklowe owned buildings

June 30, 2008
Reporting by Ilaina Jonas; editing by Carol Bishopric
Reuters

Shorenstein Properties LLC, a U.S. real estate private equity firms, purchased a controlling interest in two New York office buildings formerly owned by Harry Macklowe for undisclosed amount, the company said on Monday.

San Francisco-based Shorenstein said it bought a 94 percent controlling interest in the entity that owns Park Avenue Tower and 850 Third Avenue in New York City.

The buildings are two of seven buildings that Harry Macklowe was forced to give back to a group of lenders lead by Deutsche Bank AG (DBKGn.DE: Quote, Profile, Research) after he was unable to refinance $5.8 billion of loans.

Park Avenue Tower, at 55th Street between Park and Madison avenues, is a 615,857 square foot office building that is 97 percent leased. Major tenants in the 36-story building include the law firm of Paul Hastings; hedge fund managers Davidson Kempner Capital Management and King Street Capital Management; and private equity fund manager Oak Hill Capital Management.

The 613,664 square-foot building at 850 Third Avenue, located between 51st and 52nd Streets, is 92 percent leased. Major tenants in the 21-story building include cable and satellite entertainment operator, Discovery Communications; the law firm of Shearman & Sterling; and Citibank.

"We are pleased that we were able to execute this complex transaction in a manner that met the seller's closing timetable and requirements," Douglas Shorenstein, chairman and chief executive, said in a statement. "We believe that there are opportunities to enhance the value of these properties through active management, and that they compliment nicely our existing New York City portfolio."

Shorenstein Properties made the purchase on behalf of its ninth investment fund, Shorenstein Realty Investors Nine, L.P., a $2.06 billion private commingled fund formed in the spring of 2007.

The firm's New York City portfolio is comprised of over 4.1 million square feet of equity ownership interests in Park Avenue Tower, 850 Third Avenue, 125 Park Avenue, The Starrett Lehigh Building and over $500 million of subordinated debt interests in 660 Madison Avenue, 650 Madison Avenue, 1180 Avenue of the Americas, 450 Lexington Avenue and 14 Wall Street.