The Bank of America Center acquisition is being funded with 1031 Exchange money from Hudson Waterfront Associates' recently announced sale of properties at Riverside South on Manhattan's West Side for $1.76 billion. Shorenstein Realty Services will continue as leasing agent and manager of the property, the centerpiece of which is a 52-story tower that was the listed as the city's tallest until the Transamerica Pyramid opened in 1972.
The broker with the Bank of America disposition assignment is Douglas Harmon of Eastdil Realty in New York City. Harmon could not be reached Thursday afternoon for comment. In July, one industry source familiar with the property told GlobeSt.com that even though it was not long ago when Werner and Karasick bought Bank of America Center, it was a different asset in a different market. "Very few people could have handled it the way it was sold the first time," the source told GlobeSt.com. "It was a complicated by tax structures and never really broadly marketed, but the new owners have cleaned all that up."
The Werner-Karasick group's asking price for the Bank of America complex was $1.25 billion. However, sources tell GlobeSt.com the company never expected to achieve that price, they just didn't want to limit the potential sale price by using too low a number. "If you say the asking price is $1 billion, it's hard to get more than that," one industry source tells GlobeSt.com.
The Werner-Karasick group acquired a 50% stake in the complex last summer from Bank of America for slightly more than $400 million, sources close to the transaction told GlobeSt.com. The recapitalization of the partnership included a refinancing of the debt on the building, which sources told GlobeSt.com was in the $700-million range. BofA exercised an option to be the lender, essentially shifting its position in the building from equity to debt.
At the time the deal was announced, locally based Shorenstein Co., owner of the other half of the building, said it had no plans to sell. However, just a few months later in October, Shorenstein announced it had sold its 50% stake in the landmark Financial District complex to the Karasick-Werner group (Pacific Gold Equities LP) for a price very similar to the first deal while retaining the property management and leasing assignment.
In between those two transactions, Toronto-based IPC US REIT made a $51-million, seven-year preferred equity investment in the complex and, as part of the deal, will result in OPC owning a 10.5% interest in the asset. Industry sources tell GlobeSt.com that IPC US REIT's guaranteed stake is part of the current offering, meaning Hudson Waterfront Associates will own 100% of the asset.
Based on the contract sales price, IPC US REIT's stake has more than doubled in value and is now worth $105 million. An IPC US REIT executive did not return a phone call seeking comment.
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