The Real Deal New York

PBC has “no intention” of selling HSBC Tower in Bryant Park

CBRE’s Shanahan urged IDB subsidiary to take $900M offer for 452 Fifth Ave.

May 29, 2015 04:09PM
By Rey Mashayekhi

452 Fifth Avenue

From left: Eli Elefant, 452 Fifth Avenue in Midtown and William Shanahan

Property & Building Corporation, a subsidiary of Tel Aviv-based investment giant IDB group, insists it has “no intention” of selling its core New York asset, the HSBC Tower at 452 Fifth Avenue, despite CBRE’s William Shanahan suggesting that not doing so could prove an “unsuccessful gamble.”

The CBRE vice chair told Hebrew-language news outlet Calcalist this week that IDB should divest the Bryant Park property after receiving offers up to $900 million for the 30-story, 863,000-square-foot Class A office building.

But PBC brushed off Shanahan’s assessment, with CEO Eli Elefant telling The Real Deal that the company “has no intention of selling its core assets.”

“[PBC] is in growth mode and expanding its U.S. platform,” Elefant said.

Shanahan noted to Calcalist that not selling the property “may turn out to be an unsuccessful gamble,” pointing to a “seller’s market” for Class A office properties in the city and “great interest” in the HSBC Tower. He was also quoted citing a potential “peak” in rising prices for such office assets, adding that a decline in values may be “around the corner.”

A $900 million offer comes to a shade over $1,000 per foot. In comparison, Blackstone Group sold 3 Bryant Park to Canadian investor Ivanhoe Cambridge for $2.2 billion, or over $1,800 per foot.

Shanahan, who along with Darcy Stacom heads the city’s number two investment sales team, also addressed recent reports regarding anchor tenant HSBC’s future at the building. While HSBC’s 550,000-square-foot lease doesn’t expire till 2021, a move away from the building “would leave [PBC] with a property less attractive to potential buyers,” he said. Rents on the top floors of the building are in the high-$90s to low $100s per square foot, according to CompStak data.

PBC has received numerous offers for 452 Fifth Avenue in the last year alone, according to sources familiar with the company, who said some of the offers have been for north of $1 billion. The firm bought the property from HSBC for $330 million in a lease-back deal.

While PBC did place 452 Fifth Avenue on the market for a brief period in 2013 due to financial considerations at IDB, the company now wants to hold on to its trophy New York asset.