From left: Broadway Partners CEO Scott Lawler, 280 Park Avenue and 450 West 33rd Street

Recapitalizations are driving the Manhattan commercial real estate market as investors try to better position debt of properties acquired during the boom. Crain’s reported that one-third of all commercial transactions by dollar volume, and seven of the 10 largest office transactions, were recaps. In total, $5.4 billion worth of recapitalizations have occurred thus far in 2011, compared to $2.6 billion in all of 2010.

Two of the largest such transactions involved properties Broadway Partners acquired during the boom, Crain’s noted. In April, Brookfield Office Properties took responsibility for $517 million worth of debt Broadway Partners had at 450 West 33rd Street, a 1.6 million-square-foot office building Broadway bought in 2007, and earned a majority stake in the property. [more]

From left: SL Green CEO Marc Holliday, 280 Park Avenue (building photo source: PropertyShark), and Vornado Chairman Steven Roth

SL Green Realty and Vornado Realty Trust’s recapitalization deal at 280 Park Avenue is official, and involved the acquisition of “a significant majority stake” in the 41-story property, according to Crain’s. In March, the two landlords combined their $400 million worth of debt positions in the 1.2 million-square-foot office building into a 50/50 joint venture after it was revealed that owner Broadway Partners was running short on reserves and had begun seeking a capital infusion. They’ll pour $150 million into luring new tenants to the increasingly vacant building, and sources have speculated that they will also put up additional funds for upgrades. [more]

From left: SL Green CEO Marc Holliday, 280 Park Avenue (building photo source: PropertyShark), and Vornado Chairman Steven Roth

SL Green Realty and Vornado Realty Trust have reached a preliminary agreement to recapitalize 280 Park Avenue in exchange for a stake in the 41-story building, according to Crain’s. The two landlords last month combined their debt positions in the property into a 50/50 joint venture after news broke that the ownership was seeking a capital infusion. It’s unclear how much capital the two real estate investment trusts might inject into the 1.2 million-square-foot building, which Broadway Partners and Investcorp purchased for $1.2 billion in 2007, and the deal could still fall through. [more]

Manhattan’s two largest landlords are teaming up for the first time in a bid to take over 280 Park Avenue, the struggling Plaza District office property that’s seeking a capital infusion amid dwindling interest reserves. According to Crain’s, SL Green Realty and Vornado Realty Trust have combined their interests in the property’s two adjacent towers into a 50/50 joint venture that holds a total of $400 million in debt. The news comes one week after it was reported that owner Broadway Partners, which bought 280 Park Avenue with Investcorp for $1.2 billion at the height of the real estate boom, had hired Edgerock Realty Advisors to find new investors for the 1.2 million-square-foot property. [more]

Scott Lawlor’s Broadway Partners is seeking a capital infusion at 280 Park Avenue as the building’s interest reserves dwindle and has hired Edgerock Realty Advisors to help find investors, sources told Crain’s. Broadway acquired the 1.2 million-square-foot trophy property with Investcorp for around $1.2 billion in 2007. The building has around $440 million in outstanding securitized debt, and while the loan payments are current, reserves are only at around $36 million. [more]

Lehman Brothers Holdings, brought down in part by its huge property investments, is reinvesting in some of its existing deals on a bet that commercial property markets are bottoming out, the Wall Street Journal reported. Since the investment bank’s collapse in September 2008, Alvarez & Marsal — the firm overseeing Lehman’s bankruptcy — has reinvested more than $1 billion in apartments, office buildings and other commercial property around the country already owned or financed by Lehman and facing varying levels of distress. One of those properties is a 21-story office building at 237 Park Avenue. In 2007, Lehman originated $1.23 billion in loans to finance the purchase of the tower by Broadway Partners, retaining $437 million of the debt on its own books. Lehman also has spent nearly $1 billion to pay off partners and creditors and reach other settlements that resulted in the return of real estate assets to the firm. By investing more money into these deals, Alvarez & Marsal is hoping to salvage the maximum amount from the $14.4 billion of commercial real estate on the bank’s books. However, the success of this strategy depends in many cases on property values rising, something that is far from certain, given the tumultuous real estate market and the country’s weak economic recovery. [WSJ]

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The National Football League is nearing a deal to relocate its
Manhattan headquarters in a cost-cutting move that would shrink its
office space by about 15 percent, according to the Wall Street Journal.
The NFL is currently located in 205,000 square feet at 280 Park Avenue,
which is owned by Broadway Partners, but the lease expires in 2012 and
it is now planning to sign on for 175,000 square feet at the Rudin
family-owned 345 Park Avenue, two blocks north. The organization will
hardly be the first big tenant to downsize and take advantage of
bargain prices amid the commercial real estate slump. Office rents on
Park Avenue between 47th and 65th streets are down to $65.97 per square
foot from their $102.62 per square foot peak, according to CoStar, and
while leasing activity has picked up, that’s mostly because of tenants
like the NFL consolidating while it’s still inexpensive to do so. The
NFL, which has been cutting costs across the board since late 2008, has
around 75 fewer staffers in its New York office since the downturn
began and has tapped Ted Moudis Associates to design the new office
space. [WSJ]

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Lehman Brothers Holdings has asked for permission in bankruptcy court to invest $255 million in Broadway Partners’ 237 Park Avenue, the 21-story office tower in which the liquidating bank already has a $437 million investment. Lehman loaned Broadway $1.23 billion to buy the property in 2007 and began negotiating a possible restructuring in August 2009, when it believed Broadway was in danger of imminent default on part of that loan. In a court filing today, Lehman said Broadway Partners is now selling part of its debt and that an additional investment by the failed bank “represents the best means of protecting [LBHI's] current investment…which could be potentially wiped out if a party other than LHBI buys the debt.” [Bloomberg]

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RXR Realty has stepped up to the plate to buy Broadway Partners’ 23-story office tower at 340 Madison Avenue for roughly $570 million, or $760 a foot, according to the Post. Broadway purchased the 750,000-square-foot building, which was redeveloped in 2003 by Macklowe Properties, for $550 million four years ago, when it was only 40 percent leased. After a $50 million investment by Broadway, it is now 92 percent leased. Darcy Stacom and Bill Shanahan of CB Richard Ellis headed the marketing effort on the property. [more]

With three large Manhattan commercial properties recently listed for sale, and another reportedly on its way to the block, prospective buyers are swirling and observers are wondering whether this is the beginning of a market comeback. Last month, Broadway Partners’ 340 Madison Avenue, the 740,000-square-foot office tower that has positive cash flow and is nearly 100 percent occupied, went on the market, and sources told Crain’s it is listed for about $700 per square foot. Joining 340 Madison Avenue on the market is the Helmsley Carlton House hotel at 680 Madison Avenue, which has apparently already drawn bids of $150 million-plus, and Hines Interests’ 600 Lexington Avenue, which went up for grabs last week. Shorenstein Properties is expected to begin shopping around its 125 Park Avenue office tower next week. Since none of these properties’ owners are desperate for cash, they could easily pull the buildings from the market if they don’t command what they view as a fair price, analysts say. Vulture investors have spent the last year building up war chests in the hopes that properties like these might eventually go up for sale, but whether investors and owners will be able to agree on pricing as the commercial market emerges from its crash remains to be seen. [Crain's]