Related’s Midtown Office Haircut Comes Into Focus

In June, Related Fund Management was reportedly in agreement to sell a Hell’s Kitchen office to a venture of Namdar Realty Group, Empire Capital and Mason Asset Management for an unknown number below $50 million.

According to documents that just hit city records, the property at 321 West 44th Street was acquired for a lowly $40.5 million — a 73 percent discount on its 2018 purchase price, $153 million, PincusCo reported.

The final purchase price for the 181,000-square-foot property breaks down to about $224 per square foot. Namdar is the majority owner of the property with a 92.5 percent stake, easily dwarfing its partners.

The transaction was a short sale, meaning Related and its lenders were okay with selling the property for below the outstanding balance on the mortgage, which was reportedly above $100 million. Tenants at the 10-story building include Battery Studios and AKA.

A CBRE team arranged the transaction. Before its 2018 sale for $153 million, the property was sold in 2015 for $165 million.

The value drop was significantly greater this time around, however, as high interest rates and the pandemic took a bite out of the office sector. Owners are choosing to cut losses at a discount rather than go down the road of distress and troublesome maturities. Even the Federal Reserve’s rate cut last week wasn’t enough to save commercial property owners in tough spots.

Last year, Related CEO Jeff Blau told The Real Deal that Class B office owners should “take what you can and run.” This appears to be an instance of Blau practicing what he preaches.

Igal Namdar and Empire, meanwhile, have run into trouble on a separate Midtown office property. Over the summer, Benefit Street Partners initiated a UCC foreclosure on Namdar’s and Empire’s office properties at 345 Seventh Avenue, which the partners acquired for $107 million in 2021.

— Holden Walter-Warner