Innovo’s $855M deal for HSBC tower in trouble

Andrew Chung has been unable to close on financing, according to a filing

Andrew Chung and the HSBC tower at 452 Fifth Avenue (LinkedIn, Wikipedia)
Andrew Chung and the HSBC tower at 452 Fifth Avenue (LinkedIn, Wikipedia)

Innovo Property Group’s much-hyped $855 million deal to purchase the HSBC tower in Midtown could come apart.

The real estate firm led by Andrew Chung agreed to buy the office tower at 452 Fifth Avenue in December from Property and Building Corporation. But Chung’s team has not been able to close on financing, according to a filing by PBC on the Tel Aviv Stock Exchange.

The deadline for the deal to close is Monday, which is unlikely to happen, according to the TASE filing, which was reported Monday morning by Commercial Observer.

This news comes just weeks after HSBC announced it would move out of its Fifth Avenue location to Tishman Speyer’s Spiral in Hudson Yards.

Sources previously told The Real Deal that Innovo had difficulty securing financing and was shopping around. The deadline for the deal was previously postponed, according to a filing on TASE.

PBC, led by Eli Elefant, put $2 billion in U.S. real estate assets on the market in December as its parent company seeks to reinvest in Israel.

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The company, an affiliate of Israeli holding company Discount Invest­ment, tapped Eastdil Secured’s Roy March and Gary Phillips to market the Midtown property. The building was expected to go for around $850 million, or $982 per square foot.

The HSBC deal could affect PBC’s deal to acquire a stake of another Israeli company, Bayside Land Corp, according to a TASE filing. PBC agreed to pay 3.1 billion shekels for a 37 percent stake in Bayside, in what would be one of the largest private deals on Israel’s capital markets, according to the Israeli news publication Globes.

PBC bought 452 Fifth Avenue for $330 million, or $381 per square foot, in 2010 from HSBC as the bank was selling office properties in wake of the financial crisis.

Chung is known for his successful bet on the industrial and warehouses in New York City. In one of his more notable deals he paid Baldor Specialty Foods $54.25 million in 2019 for a refrigerated warehouse in the South Bronx. He leased it to Amazon and then sold it last year for $119 million to CenterPoint Properties. Chung’s biggest backer on deals is reported to be Hong Kong’s Nan Fung Group.

Innovo and PBC USA did not immediately return a request to comment.

Rich Bockmann contributed to this story.