NEW YORK CITY—In an UPDATE to a recent story, American Realty Capital New York Recovery REIT has purchased 333 W. 34th St. from SL Green for $220.3 million. The sale of the 347,000-square-foot office property— which closed on Friday—was brokered on behalf of SL Green by Jones Lang LaSalle's capital markets team, led by Richard Baxter, vice chairman. NYRR did not use a broker.
NYRR now holds an asset that's attractive on multiple fronts, CIO Michael Happel tells GlobeSt.com.“The previous owner invested a lot of capital, so we liked the building,” he says. SL Green purchased the building in 2007 from Citibank—which occupied the entire building at that time—for $183 million. The developer put another $26 million into the restoration.
“Also, we're very positive on the Midtown West market. Hudson Yards will be developed to the west of this development and 34th street is already a major east/west corridor, so we feel this area has a lot of upside growth potential.”
Adding to the building's appeal is its tenant base. It's currently 100% leased at below market rents to four high-quality organizations: the Segal Company (Eastern States), Inc.; the Metropolitan Transportation Authority; Godiva Chocolatier Inc.; and Sam Ash New York Megastores, LLC. There's a significant promise of growth on the rent front, Happel explains.
“Over the next five years, the average contractual rent growth in several of the leases is 5% per year,” he says. “More typically in Manhattan you see a rate of 2 to 3% annually. So we anticipate good contractual growth, as well as an increase in value of the area.”
The acquisition fits well into NYRR's overall growth strategy, Happel says. “The purchase of 333 West 34th Street exemplifies our commitment to buying well-located, well-tenanted, stabilized assets in New York City with potential for asset appreciation and limited downside risk. With the addition of this asset, we have created a portfolio totaling approximately $775 million. We remain focused on acquiring quality New York City real estate with rents that are accretive to our distributions.”
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
