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

TRD 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
Blackstone’s Jonathan Gray, Starwood Capital Group’s Barry Sternlicht, and Oaktree Capital co-chairman Howard Marks (Getty)

“Phenomenal returns” for some distressed real estate investors in stocks

“Phenomenal returns” for some distressed real estate investors in stocks
(iStock)

Real estate stocks rally on strong May jobs report

Real estate stocks rally on strong May jobs report
The FTSE Nareit All REITs index rose by 3.68 percent on Tuesday, outpacing the broader markets as the New York Stock Exchange reopened its trading floor following a two-month closure. (Getty; iStock)

REIT stocks rise as NYSE trading floor reopens

REIT stocks rise as NYSE trading floor reopens
From left: SL Green CEO Marc Holliday, Land & Buildings Investment Management founder Jonathan Litt and Vornado chairman Steven Roth (Unsplash; Land & Buildings Investment Management; Getty)

Activist investor Jonathan Litt is shorting big NYC office landlords

Activist investor Jonathan Litt is shorting big NYC office landlords
Barry Sternlicht (Credit: Leon Bennett/Getty Images, Spencer Platt/Getty Images, iStock)

“When it’s really ugly, it’s a good time to invest”: Sternlicht on Starwood’s hunt for opportunities

“When it’s really ugly, it’s a good time to invest”: Sternlicht on Starwood’s hunt for opportunities
Columbia Property Trust CEO & President E. Nelson Mills with 149 Madison and 315 Park Avenue South (Credit: Columbia Property Trust; Google Maps)

Fortuitous timing: Columbia Property Trust is done selling properties

Fortuitous timing: Columbia Property Trust is done selling properties
Lawsuit against TPG trust could be an omen for CRE finance

Lawsuit against TPG trust could be an omen for CRE finance

Lawsuit against TPG trust could be an omen for CRE finance
Jay Sugarman (Credit: portfolio breakdown map courtesy of Safehold Inc.)

Safehold’s deal pipeline shrinks while incomes hold steady

Safehold’s deal pipeline shrinks while incomes hold steady
arrow_forward_ios

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

Loading...