[IMGCAP(1)]NEW YORK CITY-Locally based Somerset Partners LLC has closed on its 450 Park Ave. acquisition, a deal that was expected to close around September 10 according to initial reports. The sellers of the 32-story class A office property were co-owners Taconic Investment Partners and New York State Common Retirement Fund.
The selling price of the 330,000-sf building, which was first revealed in July, is $509 million. Somerset principals Keith Rubenstein and Marshall Allan headed the transaction for the buyer; Douglas Harmon, senior managing director of Eastdil Secured, represented the seller. Rubenstein confirms to GlobeSt.com that the property was sold for around $1,540 per sf. According to a Bloomberg report, the price tag was the most ever paid for a US office tower on a per-sf basis.
[IMGCAP(2)]Rubenstein tells GlobeSt.com that although the closing was after the original projected date, it happened fairly quickly. “The hold-up was not due to the credit market,” he explains, “it was just a delay in the loan procedures as well as general summer holiday slowdown.”
When asked what Somerset's plans are for the building, he explains that as of now, Somerset is studying the building and making evaluations, but was optimistic of the strength of New York City's leasing market. “As of now, existing rents are between $60 and $70 per sf,” he explains. “With the new leases, I am confident that depending on where they are in the building, we could see in the leases in the $180s.”
Developed by Peter Sharp and designed in 1972 by the architectural firm of Emory Roth and Sons, 450 Park Ave. is located at the southwest corner of East 57th Street and Park Avenue, which Rubenstein notes is a very strong location. Current tenants include the Bank of New York, PNC Financial Services, Sterling Stamos L.P., Cleary Gottlieb Steen & Hamilton LLP and Banco Bradesco SA.
Taconic and New York State Common Retirement Fund bought 450 Park Ave. over five years ago. Then, through its property management arm, Taconic Management Co. LLC, the owners undertook a $13 million enhancement program that encompassed modernizing all building systems and completely revamping the lobby and plaza, as well as all common areas.
Rubenstein tells GlobeSt.com that when Somerset bought the building, they had projected a 3.5% cap rate for the first year, but things can change, he explains. For Somerset, the purchase is another in a series of acquisitions based on prime locations and timeless architecture. Somerset believes that these two fundamentals will enable its portfolio to continue to outperform the market.
Earlier this year, the company sold one of its trophy properties, 85 Tenth Ave., to locally based Related Cos. for approximately $430 million. “We are strong believers in the New York City office market,” Rubenstein notes in a prepared release. “Once we were able to identify an asset combining great architecture, a prime location, terrific views, efficient floor plates, along with a great retail component and a strong tenant profile, we moved decisively. We are confident that 450 Park Ave. will be recognized as one of the premier office buildings in the world.”
Allan notes that the company sees 450 Park will “well complement our total repositioning of 1801K St. NW in Washington now being designed by Skidmore Ownings and Merrill.” 1801 K Street, NW is located in Washington, DC's CBD, as GlobeSt.com reported. The 575,000-sf building spans the entire west side of 18th Street between K and L Streets, NW.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
