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Old March 7th, 2008, 06:36 AM   #1
hkskyline
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Selling a Fifth Avenue Skyscraper - $3 Billion Only

New York's GM building could fetch a record price
20 February 2008

NEW YORK (AP) - A prestigious Fifth Avenue skyscraper is up for sale and could fetch $3 billion or more, which would be a record price for a U.S. office building.

The General Motors building, a 50-story tower built in 1968 at the southeast corner of Central Park across from the Plaza Hotel, occupies a full city block and is best known as the home of two retail tourist attractions, the FAO Schwarz toy emporium and Apple's glass cube store.

General Motors Corp. sold the building in 1991 and the automaker now occupies only a few floors.

Real estate industry experts said its sale price would easily exceed the previous record of $1.8 billion (euro1.23 billion), which was set in 2006 by a 41-story building six blocks further south on Fifth Avenue.

One of the potential buyers for the tower is real-estate investor Joseph Cayre, who told The Wall Street Journal that he and unidentified Middle Eastern partners had put in a bid of at least $3 billion (euro2.05 billion). Cayre did not immediately return a call from The Associated Press.

A person familiar with the bidding process said real estate investor Larry Silverstein, the developer of the World Trade Center, has also offered at least $3 billion (euro2.05 billion). The person spoke on condition of anonymity because the negotiations are ongoing.

A spokesman for the tower's current owner, Harry Macklowe, declined to comment Wednesday.

Macklowe bought the building from the insurance firm Conseco for $1.4 billion in 2003. His organization began soliciting offers after running into a multibillion dollar credit problem associated with the recent purchase of several other expensive Manhattan buildings.

The offers for the GM building demonstrate continued optimism about Manhattan's real estate market, which continues to sizzle.

"You need to separate New York City from the national trend," said Andy Simon, senior managing director of the New York office of the real estate services firm NAI Global.

With vacancy rates low, rents going up and relatively little new office space under construction, "the underlying fundamentals in New York for commercial real estate remain very strong," he said.

The weak dollar would also allow foreign investors to buy the skyscraper at something of a discount, Simon said.
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Old April 30th, 2008, 11:14 AM   #2
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Harry's other sale
All eyes are on GM, but Macklowe's EOP buildings will set the market

7 April 2008
Crain's New York Business

Real estate insiders have been buzzing for weeks about how much Harry Macklowe will realize on the sale of the General Motors Building, hoping that the deal will give them insight into how the Manhattan office market is weathering the credit crisis and the economic slowdown.

Now the seven midtown office buildings that Mr. Macklowe bought last year for $7 billion--using the GM tower as collateral--are being put up for sale, and they should provide an even better perspective on office building values. While iconic towers like the GM Building sell for premium prices that are often driven higher by buyers' desire to own well-known trophies, the purchase price of these seven properties will be determined by market fundamentals.

"Everyone has been holding back [on selling] assets, because they want to see what these buildings will get," says Dan Fasulo, managing director of Real Capital Analytics, which tracks real estate transactions. "They'll create a new baseline for office building sales."

Experts agree that the properties are all attractive and that the slumping dollar will make them especially alluring to foreign buyers. Still, the deteriorating economy, New York's weakening office rental market and the credit crunch will make selling the buildings a challenge. Some expect that current conditions will push the buildings' value 10% to 15% below the price for which Mr. Macklowe bought the properties, known as the EOP portfolio.

Mr. Macklowe was forced to return the seven buildings to a group of Deutsche Bank-led lenders, which is selling them to recoup the $5.8 billion loan made to the developer. Clearly, one of those lenders, Vornado Realty Trust, doesn't believe that the buildings will generate that much money. In the fourth quarter, it wrote down $57 million of its $66 million of risky debt on the Macklowe properties.

Sales volume down

the company has good reason for concern. In the first quarter of this year, the number of sales of New York office buildings fell 59% from year-earlier levels, to 22, according to RCA; the amount of space sold plunged 87%, to 2.9 million square feet. The average sale price, $716 per square foot, was up modestly versus a year earlier but far from the peak of $839 reached in the third quarter of 2007.

Back in February 2007, when Mr. Macklowe bought the seven buildings, financing was cheap. Midtown commercial rents had recently jumped 25%, according to CB Richard Ellis Inc., with all indications pointing to further healthy increases.

Now, thousands of workers are being laid off from Wall Street firms, sublease space is creeping onto the market and brokers predict that rents this year will be flat at best, and may be down as much as 15%.

"Buyers have to make much more conservative assumptions of rent increases," says Andrew Singer, chairman of The Singer & Bassuk Organization, a real estate financing firm.

Buyers are also facing far more stringent lending conditions.

Mr. Macklowe put down $50 million to buy the seven buildings--less than 1% of the purchase price. Now lenders are demanding that buyers put down as much as 40% of the purchase price, and far fewer institutions are lending money at all. Loans for these sales will likely come from commercial banks, pension funds or foreign sources.

GM Building negotiations

the dearth of financing also has made it difficult for Mr. Macklowe to sell the GM Building--especially since the initial asking price was more than $3 billion. Two sources say Boston Properties Chairman Mortimer Zuckerman is negotiating with Mr. Macklowe, with one putting the price tag at $2.8 billion. Mr. Macklowe's spokesman declined to comment, and Mr. Zuckerman didn't return a call.

Last week, Cushman & Wakefield started marketing two of the seven buildings: 850 Third Ave. and 65 E. 55th St. Eastdil Secured began promoting 1301 Sixth Ave. last week and is expected to start marketing the rest of the properties shortly.
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Old May 4th, 2008, 03:59 PM   #3
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3 billion ... that's a lot man
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Old May 6th, 2008, 03:05 AM   #4
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Quite surprising since the most expensive skyscrapers ever built only costed around USD $1 billion. Must be the land value ...
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Old May 6th, 2008, 10:29 AM   #5
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Quote:
Originally Posted by hkskyline View Post
Quite surprising since the most expensive skyscrapers ever built only costed around USD $1 billion. Must be the land value ...
Plus inflation.
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Old January 27th, 2010, 09:45 AM   #6
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Mort's triumphs turning sour
Stalled building projects, falling values hit hard

16 February 2009
Crain's New York Business

Boston properties Chairman Mortimer Zuckerman could barely contain his glee after picking up the General Motors Building last summer for $2.8 billion in a fire sale, trumpeting the transaction as the best he had made in his nearly 40 years in real estate.

How times have changed. With the Manhattan office market entering a depression, Mr. Zuckerman is recording losses on some of his holdings in the city instead of crowing about them.

Over the past month, his real estate investment trust has taken hefty write-downs on three midtown towers and pulled the plug on construction of two others. Meanwhile, the REIT is scrambling to contain fallout from the implosion of Lehman Brothers, a major Manhattan tenant, and the troubles of its biggest leaseholder, Citigroup.

"In better times, [financial services] companies are high-quality tenants," says Jordan Sadler, an analyst at KeyBanc Capital Markets. "Today, many of them are struggling."

So is Boston Properties, the nation's largest office landlord, with about 50 million square feet of Class A space spread among 147 towers in five metro areas. In addition to the GM Building, its trophies include Embarcadero Center in San Francisco and Prudential Center in Boston.

Boston Properties logged four of the 12 largest acquisitions in New York last year, but its Manhattan portfolio has recently shaken the company. Last month, the firm reported $188 million in write-downs related to the three skyscrapers it bought last year from developer Harry Macklowe for a total of $1.1 billion. It also reported a $23 million charge connected to suspending plans for a building at Eighth Avenue and West 46th Street.

Those charges contributed to a 96% plunge in Boston Properties' fourth-quarter results from a year earlier, while funds from operations in the period sunk to $5.9 million from $147.5 million.

The outlook is only getting worse. Performance in this quarter has been gored by stopping work earlier this month at 250 W. 55th St. Analysts forecast that the move will reduce the firm's funds from operations by 5% this year.

Embarrassing moves

"the management team has a little egg on their face," says Mr. Sadler, referring to the two halted projects.

The fate of Boston Properties hinges on the Manhattan market, where the firm has 9 million square feet in eight office buildings. The holdings here generate about 42% of its net operating income, according to Mr. Sadler.

All large landlords with a heavy mix of financial services and law firm tenants face months of turbulence. The storm's source is Lehman.

"Everything changed in New York real estate once Lehman fell," says Hugh Finnegan, a partner at law firm Sullivan & Worcester.

Lehman, a longtime tenant of Boston Properties, has covered rent of $14.8 million for 436,000 square feet at 399 Park Ave. since filing for bankruptcy in September, but payments are expected to stop at the end of March.

Trends in the midtown market are sobering. The vacancy rate on top-quality buildings in the area shot to 11.3% last month from 9.9% in December and 6.2% in January 2008, according to a recent report by Colliers ABR. The average asking rent dropped 15% in January from a year earlier, to $80.70.

"Everyone is hurting right now," says Dan Fasulo, managing director of Real Capital Analytics.

Others fare worse

Boston properties' shares have fallen 49% in the past year. That is roughly in line with Vornado, another large local REIT, but far less than SL Green, the city's largest landlord, and others.

Most analysts are betting that Boston Properties, which is widely regarded as one of the nation's best-managed REITs, will weather this latest crisis. The GM Building, which has certainly declined in value since its purchase, illustrates why.

"It's the risk you take buying into a declining market," Mr. Fasulo says. "But the GM Building is a premiere asset in Manhattan, and there will always be demand."
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Old January 28th, 2010, 12:54 PM   #7
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I accept with information:
Macklowe bought the building from the insurance firm Conseco for $1.4 billion in 2003. His organization began soliciting offers after running into a multibillion dollar credit problem associated with the recent purchase of several other expensive Manhattan buildings.
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Old August 7th, 2010, 05:20 AM   #8
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Marilynn K. Yee/The New York Times
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Old January 21st, 2011, 08:50 AM   #9
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SL Green Realty acquires Manhattan office tower for $245.7 million
8 January 2011

NEW YORK (AP) - SL Green Realty Corp. said Friday it has acquired ownership interest in a Manhattan office tower for $245.7 million.

The real estate investment trust bought City Investment Fund's 49.9 percent interest in 521 Fifth Avenue from City Investment Fund, giving SL Green full ownership of the 39-story building.

SL Green originally partnered with CIF to acquire the building in 2006.

The partners subsequently invested $26.7 million into the building for renovation and other improvements.

The property recently added retailer Urban Outfitters as a tenant.

Shares in SL Green Realty slipped 43 cents to $67.05 on Friday.
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