The Real Deal New York

Kushner, CIM to shop 200 Lafayette for $150M-plus

Owners hired Eastdil broker duo to sell property, which they bought for $50 million in 2012

August 28, 2013 01:51PM
By Katherine Clarke

Jared Kushner and 200 Lafayette Street

Jared Kushner and 200 Lafayette Street

A joint venture between Kushner Companies and Los Angeles-based private equity firm CIM Group is set to put a Soho office and retail property at 200 Lafayette Street back on the market, 18 months after it purchased the property, The Real Deal has learned.

Kushner and CIM are seeking between $150 million and $170 million for the 121,000-square-foot building, which they purchased in January 2012 for just $50 million. Doug Harmon and Adam Spies of Eastdil Secured have been tapped to market the asset, which will come to market in the next month or two, sources said.

Embattled retailer J.C. Penney, whose share price has fallen dramatically over the last year after a shift in leadership, has a triple net lease on the building’s office and retail space. The company inked a 15-year deal to lease the property in May 2012, initially paying $8 million a year in rent, with a 2 percent annual fixed increase, sources said. Kushner and CIM believe that the lease is significantly under market value in light of steadily increasing rents in the area, according to a source close to the deal.

J.C. Penney’s creative department currently occupies offices on the third, fourth, fifth and seventh floors of the building, while the sixth floor is available for sublease, asking $80 per square foot. The retailer is also considering allocating its retail lease, for the basement, ground and second floors, to another tenant for around $4.2 million a year, one source said. The retail space is currently vacant.

Both Kushner and CIM declined to comment on bringing the building back to market. Harmon and Spies could not be reached. A JC Penney spokesperson did not immediately respond to a request for comment.

The current owners acquired the property from investors John Zaccaro Sr. and John Zaccaro Jr. and completed a $30 million renovation of the building, which included adding structural support for the roof and installing elevators so tenants could build a roof deck. Real estate investment trust SL Green Realty provided a loan of around $58 million for the project.

J.C. Penney’s troubles should not impact the sale of the building, sources said. The retailer’s stock has been tumbling for months now and took another dip when news broke yesterday that activist investor Bill Ackman, who owned 18 percent of the shares in the company, disclosed that he would sell his entire stake. Vornado Realty Trust also offloaded a chunk of its stake in the retailer earlier this year. The retailer fired its CEO, former Apple executive Ron Johnson, in April and has yet to find a permanent replacement.

  • JohnACritic

    It is this kind of madness where buyers are dumb enough to pay someone today 3 to 4 times the price for a property bought only a year ago. If you have been around long enough you know this has alway proven to be foolish and unwise because ultimately, markets turn for one reason or another.

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