The Real Deal New York

World’s oldest merchant bank nears deal at GM Building

Berenberg Bank has lease out for 40K sf as it plans big US expansion: sources
By Rich Bockmann | February 10, 2017 03:45PM

The GM building, Cornelius Berenberg and Doug Linde (Credit: Getty Images)

The world’s oldest merchant bank is close to acquiring a new office space that will have it rubbing shoulders with New York’s financial elite.

Hamburg, Germany-based Berenberg Bank has a lease out for the full, 40,000-square-foot 33rd Floor at Boston Properties’ General Motors Building, sources told The Real Deal.

Asking rents at the white marble-clad tower overlooking Central Park at 767 Fifth Avenue, which Mort Zuckerman’s Boston Properties owns along with Brazil’s Safra banking family and Chinese real estate developer Zhang Xin, are among the priciest in the city. In addition to its desirable location, the building is one of a few in The Plaza District that has the large floor plates desired by top hedge funds.

Tenants include the Brazil-based Banco Itau, Carl Icahn’s Icahn Enterprises and billionaire Ron Baron’s money-management firm. The asking rent for the Berenberg deal is above $170 per square foot.

Multiple sources said the agreement is on shaky grounds and may not go through, but that could not be independently confirmed. Berenberg is looking to break into the U.S. stock market amid a broader international expansion.

Representatives for Boston Properties did not respond to a request for comment. Berenberg, which is based nearby at Paramount Group’s 712 Fifth Avenue, reported its highest earnings in its 427-year history earlier this month.

Net profits rose 56 percent to 161 million Euros (or $171.13 million) on the year, and the company is looking to expand its footprint in the U.S.

Berenberg — which is also the world’s second-oldest continually operating bank after Banca Monte dei Paschi di Siena — plans to hire 30 to 50 new staffers this year and has a goal of covering 200 U.S. stocks.

“We hope to get a research license to cover US stocks in the first quarter of 2017, and then we will be able to cover US stocks from New York,” Berenberg managing partner Hendrik Riehmer told the Financial Times in November. “It will take three to four years, because you have to get the talent. You can’t just go out and hire 40 analysts.”

But as one titan of industry prepares to walk through the GM’s front doors, another is on its way out.
In September, hedge fund bigwig Richard Perry announced he would be winding down his flagship fund after 28 years.

Perry Capital, which occupies about 75,000 square feet near the base of the GM Building, is planning on giving that space back to the landlords, sources told TRD.

During Boston Properties’ first-quarter earnings call last week, company president Doug Linde said a number of prospective tenants would like to move into the GM Building, but prefer a lower-price alternative to the property’s costly tower floors.

“With that in mind, we’ve agreed to take back two lower floors from an existing tenant,” he explained, without naming the tenant. “That tenant lease expiration is in late 2020, and we reached an agreement to terminate the lease in exchange for a significant payment. While we are taking some risk on the lease-up, we feel confident we will lease the space at rents comparable to the expiring rent and have reduced our 2020 exposure at the building.”