Coach Sells 10 Hudson Yards Stake to Allianz

An evening view of the Hudson Yards from the Hudson River. Courtesy: Related-Oxford

NEW YORK CITY—Coach has sold its 44% interest in 10 Hudson Yards to Allianz Real Estate in a $707-million sale-leaseback deal. Meanwhile, the partnership of Related Companies and Oxford Property Group has closed on the $1.2-billion refinancing of the 1.7-million-square-foot property. Coach reportedly paid $530 million for its 738,000-square-foot headquarters space in 2013. The firm, which took occupancy of its space at 10 Hudson Yards earlier this year, entered into a 20-year lease for its space there as part of its sale-leaseback deal with Allianz. Douglas Harmon, senior managing director at Eastdil Secured, represented all the parties in the ownership group—including Coach—in the transaction, he tells GlobeSt.com. CBRE’s Lauren Crowley Corrinet, Mary Ann Tighe and Gregory Tosko represented Coach in the leaseback portion of the deal. Harmon and his Eastdil Secured team procured the debt for the refinancing in one of the largest joint venture recapitalizations of this year. Standing 52 stories tall, 10 Hudson Yards is now owned by a limited partnership that includes Allianz, Related Companies, Oxford Properties Group and institutional investors advised by J.P. Morgan Asset Management.Deutsche Bank and Goldman Sachs provided $1.2 billion in debt financing. 10 Hudson Yards is 94% leased with a weighted average lease term of approximately 17 years. Besides Coach, other tenants at the property include L’Oreal USA, SAP and Boston Consulting Group. In total, 74% of the leases at the building are with investment-grade tenant. “Our significant investment of approximately $420 million exemplifies Allianz Real Estate’s strategy to increase its exposure to the 24/7 global cities,” says Francois Trausch, CEO of Allianz Real Estate worldwide. The purchase price paid by Allianz, minus transaction costs and fees owed to Hudson Yards, resulted in a gain for Coach of about $30 million, which will be amortized over 20 years. “The momentum at Hudson Yards is undeniable,” says Jeff Blau, CEO of Related Cos. “The recapitalization of 10 Hudson Yards showcases the global appeal of Hudson Yards and is further evidence of the value we have created through our mixed-use strategy focused on best-in-class architecture and planning and meticulous execution. Hudson Yards is transforming Manhattan’s West Side and creating an entirely new vibrant neighborhood.” He adds that with the opening of 10 Hudson Yards earlier this year, the Hudson Yards ownership intends to launch its residential sales efforts this fall and drive towards completion of the entire Eastern Rail Yards in a few years. Blake Hutcheson, CEO of Oxford Properties Group, notes that the recapitalization of 10 Hudson Yards represents another vote of confidence in 10 Hudson Yards and the Hudson Yards neighborhood at large. “10 Hudson Yards has shone bright on the international stage since day one. Investors, tenants, lenders and partners see the once-in-a-generation opportunity this site affords and together we are creating a legacy landmark of culture, retail, residential and commerce—something that will generate true value for decades to come.” With more than 8.5 million square feet of residential, commercial and retail space now under construction or operational, Hudson Yards is on track to open the entire first phase by 2019. Sales for the 285 residences at 15 Hudson Yards will launch this year, according to the ownership. 55 Hudson Yards, home to Boies, Schiller & Flexner, Milbank, Tweed, Hadley & McCloy  and Point72, will open in 2018. The one-million-square-foot retail center and five-acre public plaza will also open in the fall of 2018, followed in 2019 by 30 Hudson Yards, a commercial office tower that will house KKR, Wells Fargo Securities, TimeWarner, HBO, CNN, Warner Bros and Turner Broadcasting, as well as Related and Oxford.