iStar-managed REIT signs $620M contract to buy ground lease at L&L’s 425 Park

L&L Holding Company’s $1B office development is on the property

New York /
Aug.August 06, 2019 03:52 PM
From left: A rendering of 425 Park Avenue, iStar CEO Jay Sugarman, and Nuveen managing director Nadir Settles (Credit: rendering via L&L Holding/Sugarman by Emily Assiran/Settles via Nuveen)

From left: A rendering of 425 Park Avenue, iStar CEO Jay Sugarman, and Nuveen managing director Nadir Settles (Credit: rendering via L&L Holding/Sugarman by Emily Assiran/Settles via Nuveen)

L&L Holding Company will soon have a new landlord at its $1 billion 425 Park Avenue office development.

Safehold Inc., a REIT managed by iStar and led by Jay Sugarman, has signed a contract to buy ground lease of the under-construction office development for $620 million, according to a notice released yesterday. The seller was Nuveen, formerly TIAA, which acquired the ground lease for $315 million in 2011, according to public records.

The publicly-traded company also signed a letter of intent with an unnamed sovereign wealth fund to form a joint venture for the acquisition of the ground lease 425 Park Avenue, according to the statement.

SEE RELATED: The resurrection of 425 Park 

If the JV is formed as intended, Safehold will retain an ownership of 55 percent of the asset. The statement noted that “ closing is not conditioned on completing the joint venture.”

The REIT, which focuses on originating and acquiring ground leases, expects the deal to close by the end of the year.

L&L is retaining the leasehold on the property and is redeveloping the property and erecting a 47-story office building on the site. L&L’s position has stayed the same and the deal has no impact on the office project’s construction schedule, a source said.

The tower is 48 percent leased, with Ken Griffin’s hedge fund Citadel as its sole reported tenant so far. The fund is taking a total of 16 floors.

Nuveen’s managing director who oversees New York office real estate investments, Nadir Settles, declined to comment on the ground lease sale. Safehold and L&L declined to comment.

On Safehold’s website, the company claims to be “leasehold lender friendly” and says its strategy allows “building owners targeting a 15 percent [return on equity to be] no longer saddled with owning the underlying land at a 5 percent ROE.”

 

Related Articles

arrow_forward_ios
New Jersey State Senator Nicholas Scutari (Photos via Nick Scutari; iStock)

New Jersey votes to legalize recreational marijuana

New Jersey votes to legalize recreational marijuana
Upper Buena Vista in Miami and the Macerich-owned Green Acres Mall in New York (Upper Buena Vista, Macerich)

Open air windfalls: Shopping centers breeze past malls in their recovery

Open air windfalls: Shopping centers breeze past malls in their recovery
Hudson Pacific Properties CEO Victor Coleman and Sunset Las Palmas Studios (Google Maps, iStock)

Hudson Pacific studio revenue takes hit

Hudson Pacific studio revenue takes hit
Apartment REITs that own Class B and C properties and those in gateway cities will see net income fall through 2021 (iStock)

Urban flight, job losses will hurt apartment REITs: Report

Urban flight, job losses will hurt apartment REITs: Report
With third-quarter earnings seasons just around the corner, REIT analysts took a look at the sectors of the industry that are most likely to benefit from a Joe Biden win or a Donald Trump win. (Getty; iStock)

Politics & property: How election results could affect REITs

Politics & property: How election results could affect REITs
(iStock)

Remote work threatens cash flows for office REITs

Remote work threatens cash flows for office REITs
Jonathan Litt of Land & Buildings (Getty Images/iStock)

The Littmus test: Veteran activist investor on his office shorting strategy

The Littmus test: Veteran activist investor on his office shorting strategy
Jeff Bezos (Getty)

Here are the landlords benefiting from Amazon’s tech workforce expansion

Here are the landlords benefiting from Amazon’s tech workforce expansion
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...