The Real Deal New York

Deutsche Bank, MRP to buy 405 Park for $240M

Donerail in contract to sell property that Witkoff, Gluck lost $39M on in a botched deal

January 15, 2016 03:50PM

405 Park Avenue

405 Park Avenue in Midtown

In one of the city’s first major commercial investment sales of 2016, MRP Realty and Deutsche Bank Asset Management are in contract to purchase Donerail Corp.’s 405 Park Avenue office building for $240 million.

MRP and Deutsche Bank have arranged to buy the 17-story, 175,000-square-foot Midtown building, located on the corner of East 54th Street, which Donerail has owned since 1981.

The deal demonstrates continued strength in property values for Manhattan commercial assets in prime locations, with 405 Park Avenue occupying a Midtown office corridor where rents regularly surpass $100 per square foot, according to Crain’s.

It also sees Donerail finally offload a property whose botched sale once cost Steve Witkoff, Larry Gluck and Westbrook Partners nearly $39 million. The three investors struck a deal to acquire 405 Park Avenue for $178.5 million in 2007, at the height of the previous commercial real estate cycle, but backed out when the market hit a downtown.

As a result, Witkoff, Gluck and Westbrook lost a $38.6 million down payment on the property, with the investors eventually suing to get their deposit back. The investors subsequently lost the case in 2012.

The office building is located just a block away from where L&L Holding Co. and partners are constructing a new Norman Foster-designed, 47-story office tower at 425 Park Avenue that is expected to command rents in excess of $250 per square foot.

Hedge fund Citadel is paying starting rents in the mid-$170s per square foot for its nearly 200,000-square-foot space at 425 Park Avenue – including a reported $300 per square foot for the building’s penthouse portion.

Washington, D.C.-based MRP and partner Deutsche Bank could capitalize on those kinds of market rents by renovating 405 Park Avenue and cashing in climbing rents as leases at the property expire.

After opening its New York office last year and hiring former Sherwood Equities executive Ryan Nelson to lead its operations in the city, MRP partnered with Long Wharf Real Estate Partners to acquire a 55,000-square-foot Midtown office condo, at the base of Joe Chetrit’s 135 West 52nd Street condo development, for more than $36 million. [Crain’s]Rey Mashayekhi

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