GIANT ACQUISITION, LEASE RENEWAL ALL IN ONE
In what was considered one of the nation’s largest deals last year,
RXR Realty and C&K Properties picked up 1285 Ave. of the
Americas from AXA Financial and J.P. Morgan to the tune of
$1.65 billion. Concurrent to that transaction, RXR signed a long-term lease renewal for a whopping 900,000 sf of space with UBS.
represented both the buyer and
seller of the 42-story, 1. 7
million-sf office tower in
the transaction. Legal
eagles at Fried Frank
Harris Shriver & Jacobson
represented the buyers.
The team included
Robert Sorin, Meyer Last,
Jennifer A. Yashar,
Richard A. Wolfe, Cyril
Pueschel and Diana V.
obtained by RXR and
C&K in connection with
the acquisition reportedly
was particularly challenging given the time sensitivity surrounding the long-term lease extension with UBS, which
was considered a critical component of the transaction; and the fact
that the acquisition was structured as a tenancy-in-common transaction for various tax related reasons.
BANK TAKES BACK OWNERSHIP OF ITS HOME
When a company is offered the chance to buy the building where
its already renting space for its headquarters, why not jump on it?
That’s just what Citigroup did at the beginning of 2016 when it
exercised its option to purchase 388-390 Greenwich St. for $2 billion from SL Green Realty Corp.
Citigroup had sold the 2. 7 million-sf complex to a partnership of
SL Green and Ivanhoe Cambridge in 2007. Then in 2013, Fried
Frank represented Citi in extending its lease of the complex and
negotiating the purchase option that it has now exercised. The
firm also is representing Citigroup on land use matters related to a
major renovation of the buildings being undertaken by the bank.
Following the acquisition of the 2.6-million-sf building, the bank
plans a unification project that will integrate 388 and 390 into one
building with a single lobby, or “town square.”
Fried Frank representatives on the deal were Jonathan L.
Mechanic, Meyer Last, Zachary Bernstein, Wesley O’Brien and
Alexander Sutherland. The team led the complex negotiations for
the deal, which initially included two alternative locations: Two
World Trade Center and Hudson Yards, each of which involved the
development and construction of new buildings. The firm navi-
gated the discussions and assisted the client with its ultimate deci-
sion to exercise its purchase option early in order to take posses-
sion of the Tribeca location and undertake a major interior and
exterior renovation of the buildings for its global headquarters.
COACH BAGS A SALE-LEASEBACK
In one of New York City’s largest real estate transactions of 2016,
the ownership of the newly developed 10 Hudson Yards recapital-
ized the 52-story tower for $2.15 billion. The complex transaction
included closing on a $1.2-billion loan provided by Deutsche Bank
and Goldman Sachs, redeeming the equity interest of anchor ten-
ant Coach Inc. and selling a 44% equity interest in the property to
Allianz SE in a $707-million sale-leaseback deal, with Coach taking
a 20-year lease. Prior to the SLB, Coach had owned its space, repre-
senting 738,000 sf at the 1.7-million-sf office property, but the lux-
ury goods manufacturer had been shopping its 40% equity interest
in the tower for months prior to the August 2016 recap, according
to published reports.
Douglas Harmon, then senior
managing director at Eastdil
Secured and now with Cushman &
Wakefield, represented all the parties in the ownership group—
including Coach—in the SLB
transaction. CBRE’s Lauren
Crowley Corrinet, Mary Ann Tighe
and Gregory Tosko represented
Coach in the leaseback portion of
the deal Legal advice was provided
by a Fried Frank team led by
Jonathan Mechanic and including
Ross Silver, Joshua Wechsler,
Robert Cassanos, Ryan M. Bathie,
Patrick Greeley, Andrew Falevich,
Chad M. Sandler and Michael Chen. A Stroock team led by Steven
Moskowitz and including Diana Brummer, Jeffrey Ufner and
Steven Rabitz provided legal counsel to the ownership, including
the Related Cos. and Oxford Properties Group, in the equity recap.
At 28 acres, Hudson Yards is the largest private US real estate development project ever—so large, in fact, that it was the scene of
another large financing transaction in 2016 (see next page).
NEW YORK’S NEXT CATCH: BIOPHARM
What started as a typical office relocation became an organizational restructure and consolidation of Intercept Pharmaceuticals’
entire east coast operations to an 85,000-sf corporate center at
related companies’ highly anticipated
55 Hudson Yards.
With offices in San Diego, London and New York, Intercept—a
small, publicly traded biopharmaceutical company—enlisted
Newmark Grubb Knight Frank in 2015 to help the company assess
its international operations and establish a global headquarters
location in the US. Specifically, the NGKF team included Ira
Rovitz, Paul Ippolito, Seth Weinstein, Bob Hess, Chris Volney and
Joseph Gioino, all of which played various roles in the transaction.
After completing extensive, in-depth research into Intercept’s
entire business operations and growth prospects over the next 20
years, along with market factors in top East Coast pharmaceutical
markets, it was determined that remaining in New York made the
most sense in terms of acquiring top talent and maintaining steady
long-term growth for the long-term.
The team was drawn to 55 Hudson Yards, which had the optimal
balance of amenities and aesthetics—but it was lacking in space,
with a roster of notable companies looking to sign leases. NGKF’s
team spoke to the property’s developer, Related Cos., and was able
to obtain, on Intercept’s behalf, a $10-million economic incentives
package from Empire State Development Corp. aimed at growing
the pharmaceutical industry in New York.
And because 55 Hudson Yards is not due for completion until
2018, NGKF also struck a deal for approximately 15,000 sf of short-
1285 Avenue of the Americas
10 Hudson Yards