Three years after rescuing a Park Avenue office tower from default Vornado Realty Trust has put the Manahattan property on the market. Vornado — which has a stake in more than 20m square feet of Manhattan office space — has instructed Eastdil Secured to handle the sale of 1 Park Avenue. It has informed the agents that it expects to make at least $650m for the 20-storey tower.
Said to be New York’s top-selling brokers, Eastdil represented Time Warner Inc in the recent $1.3bn [£785m] sale of the media company’s headquarters at the Time Warner Center. It also brokered 2013’s biggest single-building transaction in the US with the sale of midtown Manhattan’s 650 Madison Avenue for a similar price.
Murray Hill Properties and a unit of Cerberus Capital Management sold a 95 per cent interest in 1 Park Avenue to Vornado in a 2011 deal that valued the property at $427m [£257m]. It’s known the building was carrying about $250m [£150m] of securitised debt under the threat of “imminent default” at the time of the sale. Murray Hill Properties retained a five per cent stake in the property.
The trust is known to have lavished some “love and attention” on the 925,000sq ft tower, but its spokeswoman refused to say how much had been spent on maintenance and renovation. Assuming Vornado gets its asking price, and there is no reason to suspect it will not admits one New York property adviser, “it would have turned a 50 per cent profit in just 36 months”.
Located between East 32nd and 33rd Streets, the building is listed as being 85 per cent tenanted with the remaining floorspace available for immediate occupancy.
Following Vornado’s 2011 acquisition, 1 Park Avenue’s largest tenant, New York University’s Langone Medical Center, agreed to extend its lease to 2041 and expand its occupancy to 420,000sq ft, roughly half the building’s floorspace. As well as Langone, other tenants are made up mostly of financial institutions, business service and wholesale companies.
Murray Hill Properties and Cerberus had perviously spent about $15m [£9m] renovating the building, including upgrading the marble-clad lifts and lobby which features ornate barrel-shaped chandeliers hanging from vaulted ceilings. Built in the 1920s it was designed by York & Sawyer, which also designed the Federal Reserve Bank building in lower Manhattan.
1 Park Avenue is on the northern fringe of an area New York brokers call “Midtown South,” where demand by technology and media companies in recent years has driven vacancies to a national low and where office prices have doubled since hitting bottom in late 2008.
New York City commercial-property sales are expected to reach at least $63bn [£38bn] this year, almost doubling the 2013 $37.6bn [£22.5bn] total and breaking the record set in 2007. Not surprisingly, investors who bought into distressed real estate during the crisis are set to make impressive returns.
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