Source: Real Estate Alert
December 19, 2001
An investment group has agreed to pay a New York State agency about $160 million for U.N. Plaza, a three-building office complex in Midtown Manhattan that is leased to the United Nations.
The buyer is Capital Real Estate, a New York firm controlled by a group of wealthy international investors. It beat out several other bidders, including runners- up T-Rex Capital and Westbrook Partners, both opportunistic investors also based in New York.
The price tag is about $10 million more than predicted when the property went on the market in the spring. Because the 1 million-square-foot complex is under a long-term lease to the U.N., conservative investors were expected to dominate the bidding. But the Sept. 11 terrorist attacks drove some potential buyers to the sidelines.
T-Rex and Westbrook apparently were hoping to scoop up the complex at a bargain price. But Capital Real Estate made what some observers described as a surprisingly aggressive bid. The company is said to view the complex as a long-term investment with good potential for price appreciation.
Capital Real Estate has holdings in the U.S. and overseas, including France, Eastern Europe and Israel. It is currently in a joint venture with Fisher Brothers Realty of New York to build a condominium project on Manhattan’s Upper East Side. Its investors include VSP Capital Holdings, a public real estate company based in Israel.
The three-building complex — One, Two and Three U.N. Plaza — is leased to the U.N. and affiliated agencies for more than 20 years at rents of less than half the market rate of $60/sf. It is across the street from the UN headquarters at East 44th Street and First Avenue. One U.N. Plaza consists of a 370,000-sf office condominium underneath the 427-room Regal U.N. Plaza hotel. The hotel, which is separately owned, was not part of the offering. The structure is at the northwest corner of East 44th Street and First Avenue.
The 410,000-sf Two U.N. Plaza is adjacent, stretching from 44th to 45th Streets halfway between First and Second Avenues. The underlying ground is leased from Bishop Estate, of Honolulu, but could be purchased in 2020.
The 220,000-sf Three U.N. Plaza, which faces Two U.N. Plaza across East 44th Street, is leased to Unicef, which has an option to buy the property at any time. The terms of the buyout option are not known.
The seller is U.N. Development Corp., which New York State set up in 1968 to provide offices and other facilities to the U.N. and affiliated institutions, including missions and non-government organizations. The agency first considered selling the property two years ago, when it gave an advisory assignment to Cushman & Wakefield. At the time, it decided not to proceed with an offering, but this year opted to give Cushman the listing. The brokerage declined to comment.