The Real Deal New York

Prospective NYC REIT picks up first building

By Adam Pincus | July 09, 2010 01:00PM

A new company that filed late last year for approval to raise more than $1 billion as a real estate investment trust focusing on New York City commercial properties has made its first acquisition.

The
Midtown company, American Realty Capital New York Recovery REIT, bought
the seven-story Lenox Hill office property at 306 East 61st Street for
$32.7 million last month, city property records show. The
65,100-square-foot property, known as the Interior Design Building,
specializes in tenants in that trade, and has rents ranging from $24
per square foot to $100 per square foot, according to documents filed
with the U.S. Securities and Exchange Commission. The seller was Urban
Development Partners, based in Midtown, city records show.

The prospective REIT was formed in October 2009 and applied in November
to be structured as a REIT, but has not received approval from the SEC,
federal filings show. It is an affiliate of American Realty Capital,
headed by chairman and CEO Nicholas Schorsch.

The investment company also signed a contract April 14 to buy the
ground lease on two, five-story commercial building at 36 West 34th
Street and 41 West 33rd Street, between Fifth and Sixth avenues, for
$7.5 million, SEC documents show.

The ground lease is currently controlled by ALGM Leasehold II, an
affiliate of Midtown-based real estate investment firm Emmes Asset
Management, and the property is owned by BLDG Management, city records
show.

Aerosoles, the shoe retailer, is the major ground floor tenant in the
buildings. The company pays a rent of about $445,000 per year and its
lease expires in June 2012 with an option to renew.

Nicholas Schorsch, chairman and CEO of American Realty Capital, said
the properties were the first targeted for purchase by the company.

“We are actively looking for more acquisitions in the city,” he said.

There were no brokers on the purchase at 306 East 61st Street, CoStar Group data show.

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