A New York City office building owned by a subsidiary of Related Cos. will sell at a deep discount.
Empire Capital Holdings and Namdar Realty Group agreed to buy the property at 321 W. 44th St. for less than $50 million, according to people familiar with the matter who asked not to be identified citing private information . That would be about a 67% discount on the nearly $153 million Related Fund Management paid for it in 2018.
The deal was a short sale, meaning Related and its lenders, including Canadian Imperial Bank of Commerce, agreed to sell the property for less than the outstanding amount of the mortgage, the people said. The loan balance for the tower was more than $100 million, one of the people said. Short sales have become more common in the office sector as values have fallen below loan amounts.
The 10-story building in Manhattan’s Hell’s Kitchen neighborhood has approximately 20,400 square feet of space. Tenants include Battery Studios and advertising agency AKA.
Brokerage CBRE Group Inc. took care of the sales. Spokespeople for Related, Empire and CBRE declined to comment. Representatives for Namdar and CIBC did not immediately return a request for comment.
Office properties in the US have seen valuations plummet as financing costs rose and demand faltered with the rise in remote work. While newly built or renovated towers have been able to attract tenants at high rents, older buildings have struggled to fill space.
The market has been largely frozen over the past two years as lenders and owners struggled to agree on prices and held on to assets rather than being forced to sell at sale prices. But looming maturities and rising costs are beginning to prompt more owners to cut their losses. Banks, which often don’t want to take over the management of office buildings, are also being encouraged to work with landlords on deals to find buyers for the properties, including short sales.
A few deals, including this transaction, have shed light on how investors value the buildings. Other office buildings recently sold include 1740 Broadway, which Blackstone Inc. bought it for $605 million in 2014. The private equity firm ultimately wrote down its investment in the tower and agreed with its lender to sell the property this year for about $186 million.
Empire Capital, which invests in commercial real estate on behalf of wealthy families, has been actively seeking deals amid the recent real estate market turmoil. The company purchased 1200 Sixth Ave. and an interest in Mercedes House. The company also worked with partners to open 1330 Sixth Ave. in 2022. from Blackstone and developer RXR for a steep discount.
Empire also previously partnered with Namdar to acquire other office towers. The couple purchased 830 Third Ave. in 2022.
Related Cos. remains an important office owner. The company was a key developer behind Hudson Yards, which has attracted tenants such as Steve Cohen’s Point72 and Meta Platforms Inc., Facebook’s parent company. Related founder Steve Ross is also betting big on offices in West Palm Beach, adding tenants like Goldman Sachs Group Inc. since the start of the pandemic. brings in.