DEALS of the YEAR
Kushner Shells Out $1.8B
To Be Major Player in NYC
Though investment activity started to
decline as 2007 wore on, the year
started with a bang, thanks to Kushner
Cos.’ $1.8-billion purchase of 666 Fifth
Ave. in Manhattan. At $1,161 per sf, the
deal represented the most expensive
single-building sale in New York City
history. And in one fell swoop, the
666 Fifth Ave.
Seller: Tishman Speyer and Pramerica
Buyer: Kushner Cos.
Seller’s Representative: Cushman &
Wakefield EVPs Jon Caplan, Ron Cohen
and Scott Latham
Buyer’s Representative: Arthur Mirante,
C&W; Jared Kushner, Kushner Cos.; and
George Gellert, consultant
“In some ways, this transaction was a little
more significant than a normal deal because
of the scale. Not only did it validate to the
market that pricing at $1,200 per sf was
buyer solidified its presence in
Manhattan, a market in which Kushner
wanted to grow significantly. Prior to
that, the firm was known as an owner of
primarily multifamily assets, with many
of its holdings in New Jersey
A joint venture of Tishman Speyer and
Pramerica Property Fund owned the 41-
story, 1.5-million-sf office building,
located on a full block between 52nd and
53rd Streets in the Plaza District.
Cushman & Wakefield brokered the deal
for both the sellers and Kushner, which
also had in-house representation.
The transaction had a cap rate of 3.3%.
According to Real Capital Analytics,
Kushner obtained a $929.5-million first
mortgage from Barclays Capital Real
Estate Inc. with a 6.4% interest rate and
10-year term, as well as a $200-million
loan from Dillion Read Capital, to help
fund the purchase.
Tishman, which bought 666 Fifth Ave.
in 2000 for $518 million in a deal also
brokered by C&W, was initially offering a
95% interest in the property because it felt
there was additional upside that could be
garnered from raising rents on expiring
leases. But ultimately, the pricing got to a
high enough point that it was satisfactory
to sell 100% of the building.
The tower, built in 1957 and substantially renovated between 1999 and 2001,
also has some 84,855 sf of retail space and
parking for 90 cars.
achievable, but it was also a confirmation
that investors are now focused on the discount to replacement cost. With hard and
soft costs for new construction at $850 to
$900 per sf and land costs at $500 to
$1,000 per buildable foot, replacement cost
in the central core of Manhattan is now
$1,350 to $1,900 per sf. That is compelling.”
“The Manhattan office market is a logical
expansion for our company. This acquisi-
tion is an excellent opportunity for us to
immediately and significantly increase our
Also of Note
Broadway Real Estate Partners earned
some $1.2 billion in the sale of a 10-building,
2.5-million-sf office portfolio in Rosslyn, VA in
May. Monday Properties gained the assets,
which account for 30% of the local office market. The largest component of the portfolio was
the 1.1-million-sf Twin Towers, which sold for
$670 million, or $609 per sf. Monday
Properties’ Anthony Westreich brokered the
deal for the firm, Eastdil Secured acted for the
seller and Lehman Brothers provided financing.
Following its 2004 purchase and partial condo
conversion of the famed Plaza Hotel in New
York City, Elad Group decided to bring the
Plaza concept to the West Coast. The firm
bought the shuttered New Frontier Hotel and
Casino in Las Vegas last summer from the
Ruffin Cos. for $1.2 billion. With IDB
Development Corp., Elad plans to build a
$5-billion, mixed-use project on the 34.5-acre
site, reportedly the last available development
parcel on the Strip. Local analysts described
the $35-milion per acre purchase price as
“unheard of.” David Atwell and Paul Reed of
Resort Properties of America brokered the
transaction. Greenberg Traurig LLP’s Robert J.
Ivanhoe and Joseph Kishel also negotiated the
deal and helped to arrange financing for Elad.
To the tune of $204.6 million, Hudson Capital
bought the Sunset Gower Studios, a flex facility in Hollywood, CA, last summer. Comprised
of 640,274 sf of stage and office space and
development entitlements for another 381,000
sf, the site is believed to be the last redevelopment opportunity of its size in Hollywood. CB
Richard Ellis’ Kevin Shannon spoke for the
seller in the deal, a JV of Global Innovation
Partners, CalPERS and CB Richard Ellis
Investors. The deal was financed with a $155-
million first mortgage from Lehman Brothers.
Ashford Hospitality Trust paid $2.4 billion for
a portfolio of 51 hotels from CNL Hotels and
Resorts last spring. The deal gave Ashford
13,640 keys in 31 markets. The transaction
also about doubled the REIT’s holdings and
diversified its portfolio by geography and brand.
Ashford was advised by Eastdil Secured and
Lawrence Gray of Wachovia, which also provided $1.9 billion in financing, according to Real
Capital Analytics. Banc of America Securities
and UBS’ Jackson Hsieh assisted CNL.