The Real Deal New York

Andrew Chung, DivcoWest near deal for Brooklyn’s tallest office tower

SL Green was seeking about $160M for 16 Court Street in DoBro: sources

September 09, 2016 06:06PM
By Mark Maurer and Hiten Samtani

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From left: Andrew Chung, 16 Court Street in Downtown Brooklyn (right) and Marc Holliday

Andrew Chung’s Innovo Property Group and San Francisco-based DivcoWest are in advanced talks to acquire Brooklyn’s tallest office tower, 16 Court Street, in an off-market deal, The Real Deal has learned.

SL Green Realty’s 36-story Downtown Brooklyn skyscraper, long known as the Montague-Court Building, spans about 315,000 square feet. The real estate investment trust has been quietly shopping the Class A building without outside brokers in recent months, sources said.

Although Innovo and DivcoWest have yet to enter contract, sources said they are the front-runners. SL Green was seeking around $500 per square foot, or about $160 million, for the building, sources added.

Representatives for DivcoWest and SL Green declined to comment, while Innovo could not be reached.

The tower was SL Green’s first Brooklyn purchase. It partnered with the City Investment Fund to buy the tower for a whopping $107.5 million in 2007 at the height of the market. In 2013, after SL Green bought out the City Investment Fund’s stake in the tower for $62.5 million, the building was valued at $96.2 million, according to a quarterly report from the REIT at the time. The owner has invested at least $20 million in renovations to date.

Located in the Borough Hall Skyscraper Historic District, the tower’s alternate address is 206-212 Montague Street.Tenants include the New York City Department of Health and Mental Hygiene, New York City College of Technology, Marcus & Millichap, and Walgreens on the ground floor. It is 93.5 percent occupied, according to CoStar data. Asking rents for a 12th-floor space in February were $55 per square foot.

Chung, a former partner at the Carlyle Group, founded retail-focused Midtown-based investment firm Innovo Property Group last year. In the past year, it bought a 650,000-square-foot Long Island City warehouse with Westbrook Partners for $195 million and a Chinatown retail condo on Canal Street for $44 million.

DivcoWest, a real estate investment firm founded in 1993, announced in an SEC filing in May that it had raised more than $1 billion in equity funding for a new value-add investment fund. In July, the firm sold a seven-building office complex in Boston for $725 million.