NEW YORK CITY-Normandy Real Estate Partners, a national real estate investment manager/operator based in Morristown, NJ, has made its second major buy in Manhattan, acquiring 575 Lexington Ave. for a purchase price of $360 million, GlobeSt.com has confirmed with the company.
The acquisition was made by a 50/50 joint venture between New York Life Insurance Co. and an investor group led by Normandy Real Estate Fund III, which includes a German institutional investor advised by Prudential Real Estate Investors. Adam Spies and Douglas Harmon of Eastdil Secured represented the seller, Metro Fund, a joint venture between Silverstein Properties and an institutional investor.
Normandy – a firm with 17 million square feet of commercial properties throughout the Northeast and Mid-Atlantic regions – has a large presence in Northern New Jersey, but is gradually establishing its footprint in Manhattan. The company recently acquired 1370 Broadway in Midtown, making 575 Lex its second commercial office purchase in New York City.
Paul Teti, senior vice president and co-head of the leasing group at Normandy, tells GlobeSt.com that the deal fits in with the company’s acquisition strategy of value-add investment opportunities in core locations. “This asset is that in every way,” he says. “It traded at the height of the market so there were some issues relative to the capital stack. It is in a fantastic location, sitting on top of the subway. It provides access to Port Authority, Grand Central and the Plaza District, so the location is very attractive to us.”
Travis Feehan, also a senior vice president at Normandy, tells GlobeSt.com that the property will undergo a capital improvement program, including a lobby upgrade and overhaul of the building systems, which will commence in the next few weeks.
The property will be co-managed by Normandy Real Estate Management and MPI. In addition, Paul Glickman and Mitti Liebersohn will lead the Jones Lang LaSalle team that was named as the exclusive leasing agent for the building.
Teti says the building is currently 75% leased to tenants like Cornell University, New York Sports Club and Boies, Schiller & Flexner. Going forward, he says that the property’s layout will help attract smaller professional users to the area.
“You almost have to look at it as two buildings within a building,” he says. “There’s the base of the building, which is larger floorplates ranging between 20,000 and 40,000 square feet. Then there’s the tower of the building, where the floorplates are just under 10,000 square feet. Post-upgrade, we think the boutique nature of the building will be very attractive post-renovation for smaller users that will take advantage of the location.”
Originally built in 1958, the building contains ground level retail located on the eastern block of Lexington Avenue between 51st and 52nd Street and offers an on-site garage that accommodates over 200 vehicles, a large health club, and is close to a number of subway lines, as well as Grand Central Terminal. Before Normandy got in the picture, Rockrose Development Corp. considered to buy the building, but backed off during price negotiations.
Editor's note: Morrison & Foerster represented CIBC on the acquisition loan to the new owner. Mark Edelstein and Thomas McGovern were the partners involved in the deal from MoFo.
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