A New York City office building owned by a subsidiary of Associated Cos. is set to be sold at a deeply discounted price.
Empire Capital Holdings and Namdar Realty Group have agreed to purchase the property at 321 W. 44th St. For less than $50 million, according to people familiar with the matter who requested anonymity, citing private information. This would be a discount of approximately 67% from the approximately $153 million paid by the management of the related funds in 2018.
The deal was a short sale, meaning Related and its lenders, including the Canadian Imperial Bank of Commerce, agreed to sell the property for less than the amount owed on the mortgage, sources said. The loan balance for the tower is more than $100 million, one of the people said. Short sales are becoming more common in the office sector as values fall below loan amounts.
The 10-story building in Manhattan's Hell's Kitchen neighborhood is approximately 220,000 square feet (20,400 m2). Tenants include Battery Studios and advertising agency AKA.
Brokerage firm CBRE Group Inc. Dealing with the sales process. Spokesmen for Related, Empire and CBRE declined to comment. Representatives for Namdar and CIBC did not immediately respond to a request for comment.
Office properties across the United States have seen valuations decline as borrowing costs rise and demand fluctuates as remote work rises. While newly built or renovated towers have been able to attract tenants with strong rents, older buildings have struggled to fill space.
The market has largely froze over the past two years as lenders and owners struggled to agree on pricing and hold on to assets rather than being forced to sell at bargain prices. But looming maturities and rising costs are starting to prompt more owners to cut their losses. Banks, which often do not want to take over management of office buildings, are also incentivized to work with landlords in deals to find buyers for properties, including short sales.
Some deals, including this one, have highlighted how investors value buildings. Other office buildings recently sold include 1740 Broadway, which Blackstone purchased for $605 million in 2014. The private equity firm eventually wrote off its investment in the tower and agreed with its lender to He sells The property is worth about $186 million this year.
Empire Capital, which invests in commercial properties on behalf of wealthy families, has been scrambling to secure deals in light of the recent turmoil in the property market. The company purchased 1200 Sixth Street and an interest in Mercedes House. The company also teamed up with partners to purchase 1330 Sixth Ave. From Blackstone and developer RXR in 2022 for a huge discount.
Empire has also previously partnered with Namdar to purchase other office towers. the husband Buyer 830 Third Avenue in 2022.
Related Company remains the primary owner of the offices. The company was one of the main developers behind Hudson Yards, which has attracted tenants such as Steve Cohen's Point72 and Meta Platforms Inc., the parent company of Facebook. Related founder Steve Ross is too the bet Big on offices in West Palm Beach, where it has landed tenants like Goldman Sachs Group Inc. Since the beginning of the epidemic.