Mack Real Estate Credit Strategies provided $67 million in financing to Aby Rosen’s RFR Holdings to facilitate its roughly $150 million purchase of the famed Chrysler Building from Tishman Speyer, according to city records published today and confirmed by a source familiar with the deal.
RFR and acquisition partner Signa Holding GmbH—Austria’s largest privately-owned real estate company—made the winning bid for the treasured trophy asset in March at $150 million, as Commercial Observer previously reported.
New York City Department of Finance records indicate the borrowers paid $75 million to acquire the ground lease from Tishman.
A representative for Mack declined to comment on the deal.
The iconic building went up for sale in early January, and speculation swirled from market participants who spoke to CO at the time, who believed the potential valuation of the 77-story building could be anywhere from $500 to $850 million. By early March, multiple sources familiar with the bidding confirmed to CO that the bids were actually trickling in just below $90 million and no higher than $110 million.
But, with reason. The multitude of “challenges” behind the low bids on the soaring, iconic skyscraper, included the need for roughly $100 million in renovations on the aging asset, and the troublesome rising costs associated with the ground lease held by the Cooper Union school, which would reset under the terms of the lease agreement that is in place until 2049—the rental income will get as high as $55 million per year. (In 2018, Cooper Union’s rental income from its ground lease increased to $32.5 million from $7.8 million and will increase again to $41 million in 2028, as first reported by The Wall Street Journal.)
“The ground lease is taking the economics out of the building,” one source familiar with the bidding told CO in March.
And following RFR’s acquisition, other bidders that spoke to CO said the $150 million sale price was “surprisingly high.”
Tishman Speyer sold a 90 percent stake in the building to the Abu Dhabi Investment Council for $800 million at the height of the market in 2008, retaining the remaining 10 percent ownership stake.
The 77-story building was designed by William Van Allen and completed in 1930. It was briefly the tallest building in New York until the Empire State Building was completed in 1931, keeping its title today as the world’s tallest brick building. Tenants at the Chrysler Building include Creative Arts Agency, law firm Moses & Singer and coworking firm Spaces, which signed an 111,000-square-foot lease in September 2018, as CO reported.
from Commercial Observer http://bit.ly/2P4QOK3