The Real Deal New York

Morgan Stanley lends Werner and partners $150M for Pfizer HQ buy

Investor is teaming up with Deutsche Bank Asset Management and Alexandria Real Estate Equities to buy Midtown East buildings for $365M
By Rich Bockmann | July 11, 2018 10:14AM

Left to right: Nicholas Moreau, Joel S Marcus, and James Gorman with 219 and 235 East 42nd Street (Credit: Wikipedia and Getty Images)

Morgan Stanley is providing David Werner and his partners $150 million to finance their purchase of Pfizer’s headquarters in Midtown East, sources told The Real Deal.

Werner teamed up with Deutsche Bank Asset Management and Alexandria Real Estate Equities, the California-based owner of offices and laboratories for life science tenants, to purchase Pfizer’s properties for $365 million.

Representatives for Werner and Deutsche Bank Asset Management could not be immediately reached.

Werner and Alexandria are buying the fee position on Pfizer’s 350,000-square-foot building at 219 East 42nd Street, which they will lease back to the pharmaceutical company for five years.

Alexandria will hold the majority interest in the property, and will have sole ownership after Pfizer’s lease expires. The loan from Morgan Stanley has a five-year term to coincide with the change in ownership.

Werner and Deutsche Bank’s asset management spinoff, meanwhile, are purchasing a leasehold on Pfizer’s larger building, the 825,000-square-foot 235 East 42nd Street. The asset manager will hold the controlling interest on the lease, which runs for another 40 years.

The acquisition is set to close later this week, according to Real Estate Alert, which first reported the news of Werner’s partners. A Cushman & Wakefield team led by Adam Spies, Doug Harmon, Josh King and Bob Knakal is brokering the sale of the buildings on behalf of Pfizer.

Alexandria developed the three-building Alexandria Center for Life Sciences complex at 430 East 42nd Street, but this is the real estate investment trust’s first building acquisition in the city. The purchase of the 10-story 219 East 42nd street values the property at $200 million.

Deutsche’s plans for its property are unclear. The 34-story building, finished in 1960, could be redeveloped into a larger building following the Midtown East rezoning.

Pfizer earlier this year signed a lease to relocate to 800,000 square feet at Tishman Speyer’s Spiral office building at 66 Hudson Boulevard, which enables construction to start.

Cushman & Wakefield’s Josh Kuriloff and Peyton Horn brokered the lease.