The Real Deal New York

New York REIT nears $155M deal to sell Garment District buildings

Brickman is close to entering contract for half of four-building portfolio
By Rich Bockmann | October 05, 2017 04:00PM

From left: 256 West 38th Street, 229 West 36th Street and Wendy Silverstein (Credit: Sasha Maslov)

UPDATED, Oct. 6, 10:49 a.m.: New York REIT is near a deal to sell another slice of its liquidating office portfolio to Brickman for $155 million, sources told The Real Deal.

The real estate investment trust is in late-stage negotiations to sell the Garment District buildings at 256 West 38th Street and 229 West 36th Street to the Midtown-based investor, sources familiar with the deal said.

The price works out to about $580 per square foot for both properties, which sit between Seventh and Eighth avenues.

A representative for New York REIT couldn’t be immediately reached, and a representative for Brickman declined to comment.

New York REIT paid $113.5 million in two separate deals to purchase the properties in late 2012 amid a multibillion-dollar spending spree that kicked off when the company was founded as American Realty Capital New York Recovery REIT in 2010.

It paid $48.6 million to buy the 118,200-square-foot former apparel factory at 256 West 38th Street and $64.8 million to buy the 149,883-square-foot building at 229 West 36th Street.

But two years later, an accounting scandal at the affiliated American Realty Capital Properties had investors clamoring for a shake-up, and eventually new CEO Wendy Silverstein came on board late last year to oversee the company’s liquidation.

The two properties make up half of a four-building portfolio that New York REIT hired Cushman & Wakefield to market earlier this year. The two other buildings, 245-249 West 17th Street and 218 West 18th Street, recently went into contract with Columbia Property Trust for around $515 million.

The Cushman investment sales team of Doug Harmon, Adam Spies, Kevin Donner and Adam Doneger overseeing the sale of the four properties couldn’t be reached for comment.

Brickman earlier this year lost the 59 percent stake it owned in the iconic Brill Building with Allied Partners after a lender on the building, Brookfield Asset Management’s real estate debt fund, foreclosed on the property.

Mark Maurer contributed reporting.