Meadow buys Midtown East tower for $61M
High-rise is first Class B or Class C sale in proposed rezoning area since plan announced
Meadow Partners, a Midtown-based investment fund that focuses on New York City and London, purchased an interest in a ground lease controlling a 25-story office tower at 211 East 43rd Street for $61 million, an executive at the firm told The Real Deal. The company plans to own and manage the 177,000-square-foot tower that is currently about 90 percent leased to approximately 125 individual firms, company managing partner Jeffrey Kaplan said.
“We have a value-add strategy,” for the building located between Second and Third avenues, Kaplan said. “We want to run it by the standards of other buildings in the neighborhood.”
Nearby office towers include the Graybar Building at 420 Lexington Avenue and the Chrysler Building.
The seller of the ground lease was an affiliate of the real estate investment firm Eastgate Realty. There were no brokers on the deal, which closed Feb. 22. The sale has not yet been recorded, a review of city property records shows. The underlying land is owned by the estate of Sol Goldman, and is not impacted by this sale.
Meadow has been active recently. In December, the firm paid $19 million for 42-15 Crescent Street in Long Island City and in November partnered with Stone Street Properties to pay $33.5 million for 260-268 Elizabeth Street in Nolita. These three acquisitions were funded using about $50 million from the firm’s second fund, which has raised about $230 million of a $400 million goal.
Despite the possibility of Mayor Michael Bloomberg’s proposal for a major rezoning of the area — which is intended to bring modern office development to the Grand Central submarket — this is the first of the typically older Class B or Class C buildings to trade since the plan was announced in January 2012, an analysis of CoStar data shows.
Kaplan said the acquisition was not made with the rezoning proposal in mind. The property is adjacent to the 634,000-square-foot 685 Third Avenue, owned by pension fund TIAA-CREF and Australian sovereign wealth fund, the Future Fund. The city’s Department of City Planning identified that building’s footprint — but not 211 East 43rd Street — as a potential redevelopment site under the rezoning plan.
Although no other Class B or C buildings sold in the proposed rezoning district since January 2012, 14 Class A office buildings (or major interests in them) have sold or are expected to sell for a total value of about $4.4 billion in the same period, an analysis of CoStar data shows.
The recent office building sales include the 855,000-square-foot Sony Plaza building at 550 Madison Avenue, which is expected to sell for $1.1 billion, and the 1.2 million-square-foot 237 Park Avenue, for $800 million.