Safehold finances 685 Third ground with $135M from John Hancock

Crown jewel of Unizo’s $1.3B NYC portfolio was sold in December

New York /
Mar.March 11, 2020 06:00 PM
Safehold’s Jay Sugarman and 685 Third Avenue (Credit: iStar and Google Maps)

Safehold’s Jay Sugarman and 685 Third Avenue (Credit: iStar and Google Maps)

The owner of the ground under 685 Third Avenue closed on financing for the fee interest.

Safehold, the iStar-managed ground lease REIT, secured a $134.8 million mortgage from John Hancock Life Insurance Company for its fee interest in the 31-story Midtown East office tower, property records show. The firm had acquired 685 Third from Japan’s Unizo Holdings in late December, holding onto the $180 million fee interest and selling the building leasehold to BentallGreenOak for $271.25 million.

BentallGreenOak, which was formed last year through the merger of Bentall Kennedy and GreenOak Real Estate, financed its acquisition with a $150 million loan from Chicago-based Heitman Capital Management.

A non-disturbance agreement between BentallGreenOak and John Hancock notes that the lender also provided a mezzanine loan, but the amount is undisclosed.

Safehold declined to comment, and John Hancock did not immediately respond to a request for comment.

The 650,000-square-foot building between 43rd and 44th streets was the last property in Unizo’s former $1.3 billion NYC portfolio, which the firm has been liquidating as it faces a hostile takeover bid in Japan, even selling some buildings at a loss.

The amounts that Safehold and BentallGreenOak paid for their interests in the property add up to $451.25 million, a slight discount from the $467.5 million that Unizo paid in 2017 in an all-cash deal.

Blackstone Group has recently emerged as the top bidder for Unizo — which is primarily a hotel chain — valuing it at just under $2 billion.

Safehold’s acquisition of the ground under 685 Third Avenue was one of a handful of big-ticket New York City deals it pulled off in late 2019, boosting the firm’s profile as it seeks to persuade the commercial real estate industry that modernized ground leases can be a revolutionary tool for improving capital efficiency.


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