UPDATED, 1:14 p.m., May 21: The Chera family’s Crown Acquisitions, along with the large Canadian investment firm Oxford Properties Group, are just days from closing the acquisition of the 33-story skyscraper located at 450 Park Avenue designed by Emery Roth & Sons.
The purchase price, $545 million, puts almost half the value of the tower in the retail base, insiders told The Real Deal.
In February, it was reported that Oxford inked a contract to buy the 321,000-square-foot building with a price tag of $575 million, but Crown, led by Stanley Chera, was not revealed as a partner at the time. In addition, sources explained the price difference, telling TRD that the actual sale price is about $545 million. But sources said the agreed-to-terms provide about $30 million in additional value or savings to the seller, such as assuming the current debt, that yields the originally reported price of $575 million. Oxford declined to comment to The Real Deal.
The building is at the corner of 57th Street and adjacent to Macklowe Properties and CIM Group’s super-luxury residential and retail tower, 432 Park Avenue. The sellers were Keith Rubenstein’s Somerset Partners and a family trust of British investor and racehorse owner, Michael Tabor. They bought the building in the thick of the last real estate boom in October 2007 for $509 million, at a record price per foot of about $1,583.
Eastdil Secured’s Doug Harmon and Adam Spies brought the property to market and were the brokers on the transaction. Crown and Eastdil declined to comment. Oxford and Somerset did not immediately respond to a request for comment, and Tabor could not be reached.
The purchase is another example of store rents driving the value of office buildings in New York City, where retail values have soared, including in high-traffic areas such as Fifth and Madison Avenues as well as 57th Street. Over the past three decades, for example, Upper Fifth Avenue ground floor rents are up by about 700 percent while average office rents in Midtown have barely doubled.
This is the second office and retail building Crown has partnered with Oxford to buy over the past eight months. In September 2013, the pair hooked up with Vornado Realty Trust, Highgate Holdings and JPMorgan Asset Management to snag 650 Madison Avenue, between 59th and 60th streets, for $1.3 billion in another mega-purchase driven by an expectation of rising retail values.
Sources said the buyers expect the retail portion of the building to bring in about $12 million per year in rent, based on an estimated ground floor rent of nearly $1,200 per foot. The gross rent figure is about 10 times the current rate of about $1.2 million, according to information from building income database Genesis Computer Consultants.
Crown and Oxford value the approximately 35,000 square feet of retail at $245 million, or about $7,000 per square foot, and the balance of the building — the approximately 286,000 square feet of office space — at about $1,048 per foot.
The retail is composed of about 7,000 square feet each on the ground floor and second floor, with the 16,000 square foot balance in a mezzanine, and lower level that is used for selling. The auction house Phillips occupies the entire retail portion of the building, with a lease that runs for three more years. The firm did not immediately respond to a request for comment.