It took about three years longer than expected, but Michael Shvo has purchased the office portion of 685 Fifth Avenue from General Growth Partners, according to sources familiar with the deal.
Shvo has partnered with the Wings Group, BLG Capital and Deutsche Finance America to purchase floors five through 20 of the building for $135 million—the same price Shvo had planned to purchase the building for in 2015. The partners purchased the building in an all cash transaction and will seek about $100 million in debt financing for the deal.
GGP will continue to own the retail portion of the building. It had owned the property in a joint-venture with Thor Equities, but earlier this year, Thor’s interest in the building shrank to 2.97 percent. GGP itself recently approved a $15 billion buyout of the company from Brookfield Property Partners.
The Department of Buildings issued a permit for 685 Fifth Avenue on Wednesday to add five floors to the building, which would turn it from a 20-story building standing 227 feet tall into a 25-story property standing 292 feet tall. Construction should begin almost immediately.
“We are excited that after three years of working on this transaction with GGP, we finally purchased this iconic building with our partners,” Shvo said.
GGP did not respond to a request for comment.
This is the second acquisition that Shvo has done with GGP. The company also partnered with Russian developer Vladislav Doronin to buy the upper portion of 730 Fifth Avenue—the Crown Building—for $500 million in 2015, with plans to convert it into luxury condos. Sources said the partners had similar plans for 685 Fifth.
Shvo’s initial deal for 685 Fifth Avenue fell through years ago, and the New York property development arm of the Gulaylar Group, a Turkish jewelry company, went into contract to acquire the building’s office component instead. However, this deal fell through as well, and Gulaylar sued GGP last year claiming that, after they signed a contract of sale, the company made changes to the building that lowered its value by up to $40 million. GGP and Thor had put the entire building on the market last year for $500 million.