TRD Insights: Here’s what tenants are paying at Michael Shvo’s latest office acquisitions
The 2 Manhattan retail/office properties are mostly closed; some tenants have sought rent relief
In the 18 months leading up to the coronavirus crisis, developer Michael Shvo and his partners were among the most aggressive investors in the market, acquiring $3.5 billion in real estate across the U.S., including Chicago’s “Big Red” office tower and San Francisco’s Transamerica Building.
Newly released ratings documents for those deals — both financed
with CMBS loans — provide an inside look at the properties: how much tenants are paying, and how the coronavirus crisis has affected them.
Shvo’s group includes Turkish developer Bilgili Holding, private equity firm Deutsche Finance America and German pension fund Bayerische Versorgungskammer (BVK).
530 Broadway Tenants
|#||Tenant||Expiration||Base Rent ($000's)||% of Total Base Rent||SF||% of Total SF||Rent / SF||Type||Sector||Covid||Other notes|
|1||Anomaly Partners LLC||2024||$6,430||28.50%||84,662||42.70%||$75.95||Office||Advertising|
|2||Club Monaco||2029||$4,776||21.20%||11,382||5.70%||$419.61||Retail||Apparel||Requested rent relief||Ralph Lauren subsidiary|
|3||Knotel||2029||$3,183||14.10%||48,524||24.50%||$65.60||Office||Co-working||Requested rent relief|
|4||Skechers USA Inc.||2033||$2,416||10.70%||4,941||2.50%||$488.97||Retail||Footwear|
|5||Vince Camuto||2026||$1,647||7.30%||4,896||2.50%||$336.40||Retail||Footwear||50% rent deferral for Apr-June, to be repaid between Oct and Dec 2020.||Dark and expected to exercise termination option, exercisable if store sales don't exceed $10.0 million ($2,042 per sf) for the period of Dec 2020 to Nov 2021|
|6||AT & T Mobility||2023||$1,437||6.40%||2,375||1.20%||$605.05||Retail||Telecom|
|7||Avalanche Studios NY Inc.||2022||$1,188||5.30%||17,990||9.10%||$66.04||Office||Video games|
|8||Alanda Music Ltd.||2022||$734||3.30%||13,573||6.90%||$54.08||Office||Music|
Source: Kroll Bond Rating Agency
530 Broadway, which is fully leased to five office and four retail tenants, is closed with tenants working remotely, according to the documents. At 711 Fifth Avenue, which is 76.5% leased to five office and two retail tenants, the majority of the office tenants are working remotely except for security and essential staff.
Two retail tenants have already been granted coronavirus-related rent relief as of June 1. At 530 Broadway, footwear retailer Vince Camuto has been granted a 50-percent rent deferral for April through June, which is to be repaid in full in the fourth quarter. The Vince Camuto space had gone dark prior to coronavirus, and the tenant is expected to exercise a termination option which will become available if sales fall below $10 million next year.
711 Fifth Avenue Tenants
|#||Tenant||Expiration||Base Rent ($000's)||% of Total Base Rent||SF||% of Total SF||Type||Sector||Covid||Other notes|
|1||Ralph Lauren Retail Inc.||2029||$27,524||42.60%||38,638||11.40%||$712.36||Retail||Fashion||In discussions with Polo Bar (0.6% of base rent) for rent relief.||Retail space vacant for over two years, Polo Bar open|
|2||The Swatch Group||2029||$23,343||36.20%||14,274||4.20%||$1,635.35||Retail||Watchmaker||50.0% rent deferral for Apr-Jun, with all funds to be repaid by Mar 2021.|
|4||Allen & Company||2033||$4,949||7.70%||70,972||20.90%||$69.73||Office||Investment banking|
|5||Loro Piana USA||2025||$1,741||2.70%||24,388||7.20%||$71.39||Office||Fabrics and clothing|
|6||Sandler Capital||2027||$676||1.00%||17,200||5.10%||$39.30||Office||Investment management|
|7||Catalyst Investors||2023||$404||0.60%||6,034||1.80%||$66.95||Office||Venture capital|
Source: Kroll Bond Rating Agency
At 711 Fifth Avenue, watchmaker Swatch Group has also received a 50-percent rent deferral for April through June, to be repaid by next March. Swatch’s base rent at the location, a whopping $1,635 per square foot, is well above market and more than twice what any other retail tenant at the two buildings is paying.
Additionally, Ralph Lauren is seeking rent relief at both properties: for a subsidiary, Club Monaco, at 530 Broadway, and for the Polo Bar restaurant at 771 Fifth. The Ralph Lauren retail space at the Coca Cola building has been dark for years.
Finally, co-working firm Knotel is the only office tenant at the two properties that is reported to have requested rent relief. The company accounts for about a quarter of the total base rent at 530 Broadway.