STAMFORD-The First Stamford Place office complex Downtown here has been sold by TrizecHahn to an investment group led by Peter and Anthony Malkin for $152.5 million.
The deal was announced by W&M Properties, the marketing, management and acquisition arm of the Malkin family. W&M has been retained to manage the three-building, 810,000-sf office complex that is located near the Stamford Transportation Center and Malkin's Metro Center office complex. This latest acquisition brings the Malkin portfolio in the Westchester-Connecticut market to 2.3 million sf, which makes the investment group the largest private commercial property owner in the area.
Commenting on the deal, which was valued at $188 per sf, Anthony Malkin says, “This is a compelling opportunity to acquire an ideally located, prime asset that is nearly fully leased at average rental rates more than 30% below current market, with some near-term potential lease rollovers, and for a price 25% below replacement cost.”
He adds that W&M Properties had been working on acquiring the complex since 1999. The deal materialized late last year, about the time the capital markets began showing signs of tightening. The complex is currently 99% leased.
“There are fewer traditional lenders and equity players for large suburban office properties, which has reduced the number of potential bidders and driven down pricing,” Malkin explains. “Many entrepreneurial buyers have been forced to the sidelines.”
Thomas P. Durels, EVP for W&M Properties, adds that the current rents at First Stamford average in the $26 per sf to 27 per sf range, while competing class A buildings are now securing rents just north of $40. One-third of the existing tenants have leases coming due in the near future.
Durels adds that the acquisition also provides “a good hedge against a softening of the market” since existing rents are significantly lower than current asking rents at comparable properties.
The new ownership plans to invest another $8 million in capital improvements. The acquisition was funded with equity from a private offering placed with individual investors by Wien & Malkin Securities and institutional debt financing from TIAA-CREF and the New York State Teachers Employee Retirement System.
The complex, built in the mid-1980s, is tenanted by such firms as Citigroup, Philip Morris, Northstar Holdings, Weekly Reader and TIG Reinsurance.
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John Jordan
John Jordan is a veteran journalist with 36 years of print and digital media experience.
