Swig Equities quietly shopping 110 William Street

Eastdil Secured brokers have been gauging interest in FiDi office tower

TRD New York /
Aug.August 27, 2013 07:55 AM

Investment and development firm Swig Equities, headed by embattled developer Kent Swig, is seeking a buyer for a 900,000-square-foot office property it owns in the Financial District, The Real Deal has learned.

Swig has tapped Eastdil Secured to market the property, at 110 William Street, sources said. Adam Spies, senior managing director at Eastdil, would not confirm or deny that he was marketing the building, but sources said Eastdil brokers were shopping the property off-market. A Swig spokesperson declined to comment.

Swig acquired the property from Trizec Properties in 2004 for $164.5 million, public records show, and completed a major capital improvement program, including renovations of the building’s lobby and façade, soon after. He refinanced using a $161.5 million loan from UBS Real Estate Securities and Barclays Capital last year. Pearlmark Real Estate Partners also provided a new $20 million mezzanine loan on the property at that time.

While it was not immediately clear how much Swig is asking for the 32-story commercial office tower, recent transactions in the neighborhood suggest that deals for Class A office buildings have been closing for between $300 and $400 per square foot, which would bring a purchase price of $270 million to $360 million.

Based upon recent comps, Nick Petkoff, a director of sales at Massey Knakal Realty Services, who was not involved with the listing, said he was confident that the property could trade for more than $335 per square foot.

When Northwood Investors, the owner of the New York Palace Hotel, bought an office building at 100 Broadway last month, it paid slightly under $400 per square foot, as previously reported, and California-based private equity firm CIM Group closed on a 25-story, 330,000-square-foot building at 5 Hanover Square for just over $300 a foot earlier this week. Office buildings at 2 Rector Street and 180 Water Street sold for $300 per square foot and $296 per square foot in June and July, respectively.

Eric Anton, a managing partner at commercial brokerage Brookfield International, who was unfamiliar with the listing for 110 William Street, told The Real Deal that demand for Downtown office buildings has increased in recent months, particularly for Class B and Class C properties. Investors are beginning to see the potential of the Financial District, he said, particularly in the run up to the opening of the World Trade Center and the unveiling of the new retail spaces at Brookfield Place at 250 Vesey Street.

There’s an enormous potential for rent growth as the neighborhood begins to come into its own, he said, particularly as there’s still a major discrepancy between office rents in the Financial District, where low floors in Class A buildings might only command $30 per square foot, and in buzzed-about areas like Midtown South, where you see rents ticking up to $60 a foot.

For instance, the Pacific College of Oriental Medicine relocated to 110 William Street last month in order to slash its monthly rent by more than $20 per square foot, as previously reported. It moved from 915 Broadway in Noho, where rents were reportedly in the $50s per square foot, to Swig’s property, where the asking rent was in the low $30s per square foot.

“It’s getting to the point where you can envision [the future of the neighborhood,]” Anton said. “We’re getting close.”

Swig’s building is currently 99 percent leased, according to data from CoStar Group. The building’s largest tenants include agencies like the New York City Housing Development Corporation and the New York Liquidation Bureau, which lease 64,000 square feet and 116,500 square feet, respectively.


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