The Real Deal New York

HSBC, D.C. firm buy out final 51% stake in Bertelsmann building

September 29, 2011 04:38PM
By David Jones

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HSBC Alternative Investments and Edge Fund Advisors said today that they have bought out the remaining 51 percent stake in the Bertelsmann building at 1540 Broadway, in an off-market transaction.

The partners bought 49 percent of the building from CB Richard Ellis in November 2010, in a deal valued at $254 million, or $575 per square foot. CBRE had previously acquired the property in a fire sale from Macklowe Properties. Terms of new deal were confidential and could not be disclosed.

Mark Keller, chairman and CEO of Edge Fund Advisors, said that the buyout was part of the original plan when the firm bought the 49 percent stake in 2010, but the current debt was not expected to mature until 2013, meaning the new deal was not expected to happen this soon.

He said that low interest rates following the recent economic turmoil made the buyout more favorable to buy the stake out now rather than later.

“It made a lot of economic sense in the current interest rate environment,” he told The Real Deal.

The companies have also closed on a deal with Metropolitan Life Insurance to refinance the property’s existing debt.

The 44-story, 907,000-square-foot building is one of the most prestigious addresses in the Manhattan skyline. Since buying the original stake in 2010, the investors have raised the occupancy to more than 92 percent, with tenants including Viacom International., Yahoo, China’s Xinhua News Agency and the law firm of Pillsbury Winthrop Shaw Pittman.

CBRE remains the leasing broker and manager of the building. Yahoo, which signed a 10-year lease in March, is reportedly paying about $68 a square foot for 55,000 square feet of space for the first five years and will pay $74 a square foot afterwards.

The deal represents the third major acquisition by HSBC and Washington, D.C.-based Edge Funds since December 2009. The first two deals were in Washington D.C.

Keller noted that demand is picking up for New York City real estate and that global capital is actively looking for new deals here. He said the venture was looking at a number of buildings in New York, but did not elaborate.

Edge Fund manages the assets under an exclusive agreement with the HSBC unit, which represents a group of wealthy individual investors.

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