Lehman Brothers Holdings Inc. has agreed to sell the Manhattan
office tower at 237 Park Ave. to a venture of RXR Realty LLC and
Walton Street Capital in what would be one of the largest sales in
Manhattan in the past year.
The price is more than $800 million, according to multiple real
estate executives with knowledge of the sale, including about $420
million in debt that would be assumed by the new owners.
The deal, which has not yet been finalized, marks the latest
purchase by Scott Rechler, RXR's chief executive who has been one
of Manhattan's most active buyers since 2010. In January, he took
control of the 33-story tower at 75 Rockefeller Plaza. In the past
two years, he also led groups that purchased other buildings
including 450 Lexington Ave. for $668 million and the Starrett
Lehigh Building on Manhattan's West Side for about $920
million.
The deal comes at a time when Manhattan office building values
have been increasing. Still 237 Park's price tag is well off the
$1.2 billion price that was paid for the property in 2007, a sign
of how frothy the market got during the boom years.
Lehman back then was the financial backer of Broadway Partners,
an active buyer in the years leading up to the bust. Broadway paid
top dollar for 237 Park betting rents would rise. But instead,
rents fell, and Lehman, which held much of the property's debt,
struck a deal in 2011 to take control of the building from
Broadway. Last year, Lehman tapped Jones Lang LaSalle Inc. (JLL) to
market the 1.2 million-square-foot tower.
Mr. Rechler said in an interview he plans a significant
renovation of 237 Park, including a redo of the lobby and some of
its facade. The property, a drab, boxy office building between 45th
and 46th streets, is currently about 20% vacant and has significant
expirations coming in the next two years.
"This building needs a full upgrade, so it's going to get it,"
Mr. Rechler said.
The deal comes a month after a who's who of the real estate
industry vied to buy Sony Corp.'s (SNE) U.S. headquarters at 550
Madison Ave. The Chetrit Group was the victor with a bid of $1.1
billion, and it is planning to convert the property to a hotel and
condominiums once Sony leaves.
Write to Eliot Brown at Eliot.Brown@wsj.com
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