Anbang looks to sell 5th Ave office condo at steep discount

Chinese insurer paid $415M four years ago, and is now eyeing a sales price north of $200M

TRD New York /
Jun.June 18, 2019 04:00 PM

717 5th Avenue (Credit: Google Maps and iStock)

717 5th Avenue (Credit: Google Maps and iStock)

Anbang Insurance Group has decided to sell off another one of its pricey Manhattan properties. And this one could go at a steep discount.

The Beijing-based conglomerate has put the office condominium at 717 Fifth Avenue up for sale, sources told The Real Deal.

Anbang, which became a poster child for China’s extreme appetite for overseas acquisitions, is shooting for a sales price north of $200 million, sources told TRD, which could be roughly half the $415 million that the insurance giant paid for the property four years ago, at the height of the market.

One explanation for the dramatic gap between prices could be the property’s unique tax structure. Anbang pays property taxes based on the square footage of the office condo, as opposed to the condo’s value relative to the building. (Jeff Sutton’s Wharton Properties and SL Green own the retail portion of the building and a smaller office condo on the fourth floor.)

That means Anbang pays an outsized portion of the property’s hefty tax bill. A source familiar with the property said Anbang was not aware of this at the time of purchase.

A representative for Anbang could not be immediately reached for comment. Marketing materials show that a team at Eastdil Secured has the listing. A representative for the broker declined to comment.

At $200 million, the property would be valued at just shy of $570 per square foot.

Anbang owns just about 353,000 square feet across 22 floors inside the 26-story tower at the corner of 5th Avenue and east 56th Street, which is alternatively known as the Corning Glass Works Building and the Merrill Lynch Financial Center.

The condo is 91.4 percent occupied. Anbang last month paid down a $260 million loan it got in 2015 from Bank of China to finance its acquisition, property records show.

The Chinese firm bought the office floors from the Blackstone Group at a time when it was on an acquisitions tear. But regulators have since clamped down on the company, which is looking to sell off a number of assets.

Anbang recently reportedly took bids on its 15-property Strategic Hotels portfolio, which it bought from Blackstone in 2016 for $5.5 billion. Bids for the portfolio – which includes JW Marriott Essex House on Central Park South in New York – reportedly had a spread of $1 billion and went as high as $5.8 billion.

Anbang has been under Chinese government control since February of last year, when the China Insurance Regulatory Commission took control of the company and all of its assets amid allegations of illegal activity at the company. Wu Xiaohui, Anbang’s former chairman, , was sentenced to 18 years in prison last May after he was convicted of overseeing a $12 billion fraud.

Xiaouhui’s lawyers have not been able to see their client for almost a year, raising concerns about his safety, the Financial Times reported last week.

Meanwhile, Anbang is moving forward with its condo conversion at the Waldorf-Astoria, where the first of the project’s 375 units are expected to hit a crowded market in the fall. Units are expected to be priced north of $3,500 a square foot, among the highest in the city.

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