last two unsold towers in the Macklowe/Equity Office portfolio that Deutsche Bank took back in early 2008--1540 Broadway--has finally found a buyer. CB Richard Ellis Investors is closing a reported $355-millon deal to acquire the office portion of the 1.1-million-square-foot skyscraper with its CBRE Strategic Partners US Value 5 Fund. A spokeswoman for CBRE Investors tells GlobeSt.com that the company does not comment on speculation. A release from CBRE confirms the purchase of 905,533 square feet at 1540 Broadway, but not the sale price.
The Wall Street Journal reported in mid-February that CBRE Investors was back in the bidding for the 44-story Times Square office and retail property, although the Journal article said at that time a deal hadn't been finalized. A week later, Real Estate Finance and Investment reported that CBRE Investors had signed a non-refundable contract for just under $360 million, while the New York Observer, citing unnamed sources, said on Thursday that the deal was about to close.
Dan Fasulo, managing director of Real Capital Analytics, was quoted in the Journal article as saying that if the $355-million figure is accurate, "That's a harsh price for a well-located building." Fasulo could not confirm to GlobeSt.com whether the deal had taken place at that time.
If the property is changing hands for $355 million, it would be a lower figure than the $426.5 million that the Paramount Group paid for it in 2004. Paramount realized a profit of about $400 million when it sold 1540 Broadway to Equity Office Properties and Vornado Realty Trust, GlobeSt.com reported in May 2006. Vornado acquired the retail, parking garage and signage components of about 152,000 square feet for $260 million, while EOP paid $525 million for the tower's 900,000 square feet of office space.
Nine months later, 1540 Broadway and seven other EOP towers were sold to Macklowe Properties in a $7-billion transaction. At the time, Macklowe valued 1540 Broadway at $950 million. A year after that February 2007 deal, the properties were taken back by Deutsche Bank after Macklowe defaulted on short-term loans.
Last May, Boston Properties and its partners bought three of the Macklowe/EOP properties--540 Madison Ave., Grand Central Tower and 125 W. 55th St.--and the General Motors Building at 767 Fifth Ave. in a $3.95-billion package. In August, the Paramount Group closed on 1301 Ave. of the Americas for $1.45 billion. Mitsui Fudosan acquired 527 Madison Ave. for $225 million and Chicago-based Transwestern purchased 126 E. 56th St. for $160 million, both in September.
That leaves the two remaining pieces of the portfolio, 1540 Broadway and Worldwide Plaza at 825 Eighth Ave. A reported $2-billion deal to sell both properties to George Comfort & Sons fell through in November. More recently, the Journal reported, hedge fund Fillmore Capital was close to securing both towers, but that deal also did not reach fruition.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
